The interest rate is expressed as a percentage, like 4 percent, and is
charged against the amount you owe on the property. It is not the same
as the annual percentage rate, or APR, which you will also see on loan
estimates. The APR factors in other costs, like processing fees and
mortgage insurance premiums, to reflect the total annual cost of the
loan.
What Determines My Interest Rate?
Many factors affect the interest rates offered to you by lenders,
including your credit history, how much money you’re putting down, the
term of the loan and the type of loan. The Consumer Finance Protection
Bureau, a government agency, has an
online tool
that enables you to play with different factors to see how they
influence your rate.
How Do I Get the Best Rate?
Compare offerings from both a broker and any lenders you talk to
directly. Also compare their approaches. As a first-time buyer, you want
a broker or loan officer who is willing to take the time to answer all
your questions and walk you through the home-buying process.
For more information on buying a home, check out the Consumer Financial
Protection Bureau’s detailed online guide,
Owning a Home.
