What are Mortgage Rates?
A mortgage rate is the percentage of interest charged by mortgage lenders on a house or condo purchase.. An interest rate is the price of borrowing money, and a mortgage interest rate is the price of borrowing money with the difference being that the home is used as collateral for the loan itself.
Mortgage rates are quoted (as 4% or 4.75%) by lenders as an annual interest rate. Interest rates are influenced by a variety factors in the financial markets of which lenders typically have little control over. The rates can change multiple times during a business day and occasionally change dramatically from one day to another but typically they change in small increments from day to day. Borrowers can choose to lock in their interest rates with their loan officer for different time periods such as 30, 45, 60 days or more. Longer lock periods usually result in a higher rate because the lender is taking the risk that markets will change in the period that the loan lock is guaranteed.
Mortgage rates can be fixed for the life of the loan or “adjust” regularly. Click here to learn the difference between a Fixed Rate Mortgage vs. Adjustable Rate Mortgage.