MORTGAGE GLOSSARY
What Is an Interest Rate?
The short definition
Your interest rate is the percentage a lender charges you each year to borrow the loan amount, expressed as an annual rate even though it's calculated monthly. It's separate from APR, which bundles in fees too.
Why it matters
Rate is one of the biggest levers on your monthly payment. Even a small difference — a quarter or half a percentage point — can add up to tens of thousands of dollars over the life of a 30-year loan.
What affects your rate
Credit score, down payment size, loan type, loan term, and broader market conditions all play a role. See what credit score you need to buy a house for how your score factors in.
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