How does an interest rate have an effect on a mortgage? As you’ll see in the video, a lower interest rate allows you to borrow more money. With a higher interest rate, you will have a lower mortgage amount.
Interest rates can fluctuate as you shop for a home. Using an experienced loan officer will help in guiding you to when to lock in your interest rate. Lock-in means that your interest rate has been locked for a specific period of time such as 15, 30, or 60 days. These timeframes mean that you need to close your loan within the locked period of time.
Remember that a lender must disclose the Annual Percentage Rate (APR) of a loan to you. The APR shows the cost of a mortgage loan by expressing it in terms of a yearly interest rate. It is generally higher than the mortgage interest rate because it also includes the cost of points, mortgage insurance, and other fees included in the loan.