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All About Interest Rates


One way to think about Interest Rates is to consider it a "rental fee" of sorts. If I rent you the use of my equipment, say, a lawn mower, I can charge you a daily fee for the rental, and expect you to return my equipment. Borrowing money through a mortgage is a similar concept. I loan you the amount you need for a mortgage, and charge you an interest rate for using that initial amount. In the end, as a lender, I would expect to get my initial loan amount back, plus the interest that has accumulated over the term of the loan.

The higher the interest rate I set (that is, the higher my 'rental' fee for the money) the more interest you will have to pay, and, hence, the more you will have to borrow, and the higher amount you'll have to repay each month.

The Interest Rate is a good indicator on the cost of borrowing, but it isn't the only indicator. You should also consider the following aspects:

Interest vs. Lender & Broker Fees

Interest isn't the only cost of borrowing. There are also lender and broker fees, as well as discount points, that are due at closing.

APR

The Annual Percentage Rate is a better way of determining the total cost of a loan than its basic interest rate. The APR includes the additional fees that a simple interest rate may ignore.

Customer Feedback

  • Buying a home can be stressful. It is a huge commitment and your largest monthly obligation. I entrusted Heather at First Capital Group to go through this journey with me. I call it a journey, because I first reached out to Heather almost two years ago and my credit was less than stellar and Heather helped me to improve my credit, did not push me into something before I was ready, and was always optimistic about me being able to achieve my goal to become a home owner. Of course, with such a big decision, I shopped around with different lenders when my credit improved. Nobody was able to beat the customer service that Heather offers. She does an amazing job keeping you up to date on the process and on top of that, she was able to get a better interest rate than any of the other lenders. Heather's assistant Kim is also very pleasant and stays on top of the paperwork and answers any questions if Heather is unavailable. Together, they don't skip a beat! Heather is very caring and committed to making the home buying process rewarding for her client. I recommend her to anyone looking to purchase a home and will forever be grateful for her services!

    Thank You,

    Cecily

    ~ Cecily Jaimez