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Refinance Purchase Home Equity

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Why Are Mortgage Rates Important?

By Ann White

Tips to Help You Choose the Best Home Interest Rate For Your Mortgage

Mortgage rates have been popular in the news lately. As many economists talk about the effect of interest rates on the national economy, you may be wondering if these rate levels have anything to do with you. Actually, mortgage rates are very important in helping you secure your dream of home ownership.

Interest Rates Affect Your Loan Options

Home mortgage rates will often determine the kind of loan you are able to obtain. Many people choose between fixed-rate loans or variable-rate loans. A fixed-rate loan is a mortgage that has a permanent interest rate for the life of the loan. Interest rates for these loans will often be slightly higher than those for adjustable-rate loans, where the mortgage rate fluctuates depending on the current national rate.

Mortgage Rates Affect Your Payment

There is a direct correlation between your annual interest percentage rate and your monthly mortgage payment. Even a slight decrease in your mortgage rate can cut your payment by a substantial amount. This is why it is advantageous to begin searching for refinance options once the national mortgage rate dips more than half a point below your current interest rate.

Your Interest Rate Affects Your Tax Return

If you are paying a substantial amount in mortgage interest, you will be able to deduct this interest on your tax return as an itemized deduction. This is one of the benefits of having a higher interest rate on your mortgage. On the other hand, if you are paying a modest amount of interest, you will save money but you will not have paid enough to deduct your interest.

Mortgage rates affect every part of your home loan. Be sure to consider your available rates carefully before accepting a mortgage offer.

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