All About Interest Rates

One way to think about Interest Rates is to consider the per day or "per diem" interest for the loan amount specified. If I loan a borrower money, I can charge a daily fee or interest, and expect the borrower to pay the full amount plus interest. 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 'per diem' fee for the money) the more interest you will have to pay.The principal and interest payment is a function of how much you borrow, for how long (example: 15 or 30 yrs) and at what rate. 

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 & Third Party Fees

Interest isn't the only cost of borrowing. There are also lender and third party charges,  as well as discount points, that are due at closing. At Secure Mortgage Company, our role is to provide you, the borrower, with all of the tools to find the best loan to meet your needs. We have price models that can illustrate the trade off tables between closing costs and rates. We can run scenarios that include "no fee purchase" loans or, loans with origination fees & discount to buy the rate down. We can also support utilizing seller contribution, and lender credits (putting costs into rate) to support the best loan terms & product for your needs.

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. When we quote rates, we'll typically publish the APR. We can provide amortization tables to show how each payment breaks down into principal and interest.