Mortgage Interest Rate

In a perfect world, if you borrowed $100,000 from a bank, then you would owe the bank the same $100,000. As it is, however, a bank is a business with the ultimate goal of profit like any other business. To realize this profit, loans are taxed so that the return payment, although broken up and staggered over a pre-established timeframe, is more than the initial loan. The exact amount depends on the amount of tax, otherwise referred to as interest. A mortgage interest rate, simply stated, can be viewed as the actual cost of a loan. Interest rates are also important in terms of signaling when it might be a good time for someone to consolidate their debt, refinance their mortgage, get and equity loan or even purchase a second mortgage. When interest rates are low, any one of these options should be considered, however, when interest rates are high, you would want to hold off on such changes.

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