Mortgage Lending Library
If you want financing for any major purchase, you've likely heard a lot about interest rates. Whether you are applying for a debt consolidation loan, mortgage refinancing, home equity loan, a home-improvement loan, second mortgage loan, or any other type of financing, interest rates will determine how affordable your loan is and how much you will have to pay each month to pay off your debt. Interest rates refer to the cost of borrowing money. They are usually expressed as a percentage number and are usually charged monthly in your loan payments. Banks and the economy determine interest rates. The worse the economy, the higher the interest rates usually go. In a booming economy, interest rates drop, encouraging people to take out loans. Interest rates also differ from person to person. If you are applying for new home loan, for example, and you have a good credit rating -- meaning that you have a good history of paying off your debts and taking on only the debts you can afford -- you will likely be quoted low interest rates. If you need to get out a bad credit home mortgage loan, bad credits home-improvement loan, or other types of loans created for people with less than perfect credit, the interest rates you are quoted may be slightly higher. The worse your credit score, the higher the interest rates you will be quoted – no matter how well the economy is doing. This is because you pose a larger risk to lenders, and they quote you a higher interest rates in order to secure their interests. If you're shopping for any sort of home financing, you'll want to look closely at interest rates. Getting the best home equity loan rate, new home loan rate, or best interest rates on any loan you take out can make your loans more affordable. Even small changes in interest rates -- getting a new home loan with 6% interest, rather than 7% interest, for example -- can save you thousands of dollars over the course of your loan. Shopping around for the lowest rates is very important when taking out any sort of financing.