How Mortgage Rates Work
What the rate measures
A mortgage rate is the interest charged on the balance you borrow. It determines principal-and-interest payments but does not include taxes, insurance or association dues. Credit, equity, loan type, term and property details can influence pricing.
A calculator rate is an assumption, not an offer. Test a higher and lower rate to see how sensitive your budget is. A lender must review your application before setting actual terms.
Rate versus APR
The interest rate is used in payment calculations. APR generally reflects interest plus certain financing charges expressed as an annualized cost. Fees, discount points and loan assumptions affect APR.
Compare APR only alongside the underlying terms. A loan with points may look cheaper over a long holding period but cost more if you sell soon. Ask how much cash you pay for a lower rate.
Compare and lock carefully
Request Loan Estimates for the same amount, term and rate type around the same time. Review origination costs, points, projected payment and cash to close. Separate prepaid taxes and insurance from lender fees.
Ask whether a quote is locked, when the lock expires and what happens if closing is delayed. Rates shown here are examples, not live lender pricing. Never rely on an advertised number without a written breakdown.