Everything You Need to Know About Mortgage Rates
When you go to buy a house, unless you're paying it all in cash, you'll likely need to take out a mortgage.
A mortgage is simply a loan from the bank that you'll need to repay over time. Typically you will put up 20% of the total price (the down payment), and the bank will provide you with the remaining 80%.
A mortgage rate is the rate of interest charged on your mortgage. Your lender determines them, and you'll either get a fixed rate or a variable-rate mortgage.
Interest rates on your mortgage loan are some of the most important considerations you should keep in mind when purchasing or refinancing a house, but here are some other important home buying terms to also keep in mind:
On a standard loan, the collateral is something that the borrower must sign over to the lender. If the borrower fails to meet the loan terms (or can't pay at all), the lender has the right to take the collateral.
Principal is the amount of money initially borrowed (for the example above, that would be $800,000). Interest is the rate that is applied to the principal (and is how lenders make money).
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