📈 Mortgage Interest Rates: What You Need to Know

Mortgage interest rates greatly influence your overall home loan costs and monthly payments.
Knowing how these rates function—and what drives them up or down—can empower you to make smarter financial decisions when purchasing your home.

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🏠 What Is a Mortgage Interest Rate?

Simply put, a mortgage interest rate is the percentage charged by your lender on the amount
borrowed (the principal). Rather than paying the full cost of your home upfront, you pay interest
each month as part of your mortgage payment.

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🔎 Types of Mortgage Interest Rates

1. Fixed-Rate Mortgage
● Your interest rate remains constant for the entire loan period, ensuring predictable
monthly payments—unless you choose to refinance.

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2. Adjustable-Rate Mortgage (ARM)
● Starts with a fixed interest rate for a set period, then adjusts periodically based on
current market conditions, potentially increasing or decreasing your payments.​​

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💡 What Is Annual Percentage Rate (APR)?

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It's important to understand that your mortgage interest rate differs from the Annual Percentage
Rate (APR). While the interest rate refers only to the cost of borrowing the principal, APR
represents the total yearly cost of the loan, including:

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● Origination fees
● Loan discounts
● Transaction fees
● Mortgage insurance premiums

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The APR is typically higher than your mortgage interest rate. When comparing loan options,
always request and compare APRs to fully grasp the total costs involved.

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📊 How Are Mortgage Interest Rates Determined?

Mortgage rates are influenced by numerous market-driven factors. These include inflation
trends, economic growth, Federal Reserve monetary policy, the health of the housing market,
mortgage-backed securities (MBS), and yields on Treasury bonds, particularly the 10-year
Treasury. Although many think the Federal Reserve sets mortgage rates directly, its policies
represent just one of several elements impacting rates.

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🌟 Today's Mortgage Rates: Influencing Factors

Several factors currently affect mortgage interest rates:

● Economic indicators like job growth, consumer confidence, and GDP.
● Inflation expectations influence long-term lending costs.
● Federal Reserve actions, including rate hikes or cuts.
● Housing market conditions, supply, and demand dynamics.
● Global economic developments affecting investor behavior.

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📞 Want Personalized Mortgage Rate Advice? Corey Johnson Team can help you navigate mortgage rates effectively, offering clear advice tailored to your personal financial goals.