How Interest Rates Work on a Mortgageby Joy Toltzis Makon Buying a home with a mortgage is probably the largest financial transaction you will enter into. Typically, a bank or mortgage lender will finance 80% of the price of the home, and you agree to pay it back—with interest—over a specific period. As you are comparing lenders, mortgage rates and options, it’s helpful to understand how interest accrues each month and is paid.
Mortgage Payment Calculation
Conventional Fixed Rate Mortgages
A conventional loan provides opportunities for financing loan amounts that are within the conforming limits set by Fannie Mae and Freddie Mac. With a fixed-rate mortgage, you have predictability and peace of mind with the same principal and interest payments for the life of the loan because the interest rate never changes.
|10 Year Fixed||3.250%||3.442%||$1563.51|
|15 Year Fixed||3.375%||3.508%||$1134.02|
|20 Year Fixed||3.875%||3.983%||$959.07|
|30 Year Fixed||4.000%||4.078%||$763.87|