Mortgage Rate.
In plain English
A mortgage rate is the annual interest a lender charges on a home loan. Even a small difference in the rate changes your monthly payment and adds up to tens of thousands of dollars over a 30-year loan. Rates move with the broader bond market, especially the 10-year Treasury yield, and with your own credit, down payment, and loan type. They are not set directly by the Federal Reserve, though Fed policy influences them. Locking a rate freezes it while your loan closes.
01Why it matters
The mortgage rate is the largest lever on the lifetime cost of a home, so a fraction of a percent is worth shopping hard for.
02The math, step by step
On a 300,000 dollar 30-year loan, a rate of 6 percent means about 1,799 dollars a month; at 7 percent it is about 1,996, or roughly 71,000 dollars more over the life of the loan.
03What this is NOT
The mortgage rate is NOT the APR. The rate is the interest alone; the APR folds in fees like points and origination charges, so it is usually a bit higher and better for comparing offers.