There are two basic types of mortgages rates are available: those with fixed rates and those with adjustable rates.
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Fixed-rate mortgages are the most common mortgage for many homebuyers because the monthly payments are stable. The interest rate you lock-in will be the same interest rate you pay for the life of the loan - whether it's a 15-year or 30-year mortgage. For example for a 30-Year fixed-rate mortgage the interest rate constant for 360 months and 15-Year- fixed-rate mortgage the interest rate constant for 180 months.
- Adjustable-rate mortgages (ARM) are popular because they usually start with a lower interest rate and a lower monthly payment. However, the interest rate can change during the life of the loan, which would mean that your monthly payment would increase (or decrease). Adjustable rate mortgages offer a variety of repayment terms: 10/1, 7/1, 7/23, 5/25, and 5/5. If you expect to move within the next four years, or you're confident your income will increase steadily over time and you want to start with a lower monthly payment, an adjustable-rate mortgage may make sense. But keep in mind that ARM interest rates can go up over time and so your payments.
While calculating the current mortgage rate the annual percentage rate (APR) is taken into consideration. It is the cost of credit over the term of the loan expressed as an annual rate. The APR is based on interest rate and points only and does not take into account other loan specific finance charges you may be required to pay.
It's important to shop around to find the mortgage and mortgage rate that's right for you. Contact lenders at banks and credit unions as well as mortgage brokers to find the best rate for you. Even a fraction of a percent can make a big difference in your mortgage payment, so you'll want to shop around and compare current mortgage rates prevailing.