Bank Mortgage Rates: How Your Loan Is Affected

If you are shopping for a new home mortgage loan, knowing where to find the best mortgage rates is essential. The interest rate charged on your home mortgage will directly affect the amount of your monthly mortgage payment. In addition, by being able to find a slightly lower interest rate, you may be able to save yourself tens of thousands of dollars over the lifetime of the loan.

To better understand how the interest rate on your mortgage can affect the payments and amount that you are required to pay for your home, take a look at the example below:

How Interest Rates Affect Home Loans

In our example, we will use a standard 30 year fixed rate mortgage loan for a home costing $150,000. We will compare the loan using two different interest rates the first interest rate is 5.5 percent and the second interest rate is 6 percent. Therefore, by amortizing the loan you can see how as little as half a percentage point difference in the interest rate can affect the amount that you actually wind up paying for your home and the amount of your monthly mortgage payment.

With the 5.5 percent interest rate mortgage loan, your monthly payments would be $851.68, and you would wind up paying $306,604.80 for your home - after all of your mortgage payments have been made.

On the other hand, the 6 percent interest loan would require monthly mortgage payments of $899.33, and would amount to a total payment of $323,758.80 over the lifetime of the loan.

Therefore, as you can see, as little as a half of 1 percent difference in the interest rate can cause you to pay more than $17,000 in additional interest charges to the lender. Also, you can see that how it directly affects the amount of your monthly mortgage payment.

Ways to Find the Best Mortgage Interest Rates

Since the interest rate that you pay on a home mortgage loan is so important, you should always research as many lender and interest rate options as possible. You should compare rates and terms with many different home mortgage lenders, in order to find the lowest rates that are available to you.

There are websites that can help make this task a lot easier. For example, websites like Bankrate and Mortgage Marvel allow you to quickly compare interest rates as well as other associated fees and charges from multiple mortgage lenders in your area. These types of web sites offer a convenient way of allowing you to view all the rates available to you at once.

Furthermore, you can choose to contact the lender directly for more information about how to proceed with for the loan or request information about requirements to get the rate has been offered on the website.

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