Understanding Mortgage Rates

Mortgage rates can significantly affect your monthly payment and the total amount of interest you’ll pay over time. Understanding the basics can make you a more informed borrower:

1. Fixed Rates
   Your interest rate stays the same over the life of the loan, making monthly payments predictable. While you won’t worry about rate hikes, the initial rate may be slightly higher.
2. Adjustable Rates
   After an initial fixed-rate period, the interest rate adjusts periodically based on market conditions. You’ll start with a lower rate but should be prepared for possible increases later.
3. Factors That Affect Rates
   Central bank policies, supply and demand, economic trends, and your personal credit score all play roles in determining your mortgage rate.
4. Rate Locks
   Once you apply for a loan, you can often lock in the current rate for a set period. If you expect rates to rise, rate locks can help secure your preferred rate.

Mastering these fundamentals will help you choose the right mortgage product for your situation, ultimately saving you money in the long run.