Why Mortgage Rates Fluctuate

Published on July 3rd, 2017

Mortgage rates fluctuate for many different reasons. The financial market changes from day-to-day and your own personal financial situation will impact the mortgage rate for which you qualify. People typically look for the lowest rate possible, but what facts exactly lead to getting the lowest mortgage rate?  To help us get to the core of rate fluctuation, let’s first ask this question:

What are interest rates?

Your interest rate determines what your monthly mortgage payment will be. Market rates are determined through the evaluation of many different factors including, but not limited to, inflation, the federal funds rate, your personal finances and the rise and fall of home purchases & home construction.

Because so many variables going into the calculation of a rate, they fluctuate frequently. Regardless of loan type, interest rates are extremely important. If you apply for an adjustable-interest-rate mortgage, understand how your interest rate can fluctuate throughout the life of your loan. Adjustable-rate mortgages have limits to how much they can rise and fall. Within these limits, there is also an interest rate cap to prevent your rate from changing too quickly within a specific period of time.

The second question to ask is:

What is APR?

APR means Annual Percentage Rate. APR evaluates each part of your loan, including the interest rate, fees/closing costs, loan terms and type. APR is used to assess the true cost of borrowing money. Knowing the overall cost, including fees, can create a perspective on how much you are truly spending.  A fixed-APR will not fluctuate, but when the APR is considered a variable APR, it will fluctuate depending on the circumstances.

Interest rates fluctuate for many different reasons. Have questions about different rates?  Call vLoan today at 1-844-77-vLoan to get more information or get your free rate quote today!

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