{"id":488,"date":"2019-10-12T23:13:38","date_gmt":"2019-10-12T23:13:38","guid":{"rendered":"https:\/\/bundleloan.com\/blog\/?p=488"},"modified":"2021-06-21T18:07:55","modified_gmt":"2021-06-21T18:07:55","slug":"interest-rate","status":"publish","type":"post","link":"https:\/\/bundleloan.com\/blog\/interest-rate\/","title":{"rendered":"Interest Rate"},"content":{"rendered":"

An interest rate is a percentage of a loan amount charged by a lender for the borrower to use the lender\u2019s money. Interest is the primary cost of your mortgage.<\/p>\n

Interest rates are typically shown as an annual number. A 4% interest rate means you will pay 4% of your loan amount to the lender over the course of a year. <\/p>\n

A Simple Interest Rate Example<\/h3>\n

If you borrow $100 from a friend for one year, at a 4% interest rate, you would pay your friend $104 after one year. You would pay the principal, $100, plus the interest $4 ($100 X 4%). Your friend charges you interest because there is some risk that you won’t pay her back. <\/p>\n

You’ll make your mortgage payment every month. If you borrowed $100,000 at a 4% interest rate, your first interest payment would be $333 ($100,000 X 4% annual interest \/ 12 months).<\/p>\n

You will also pay down a portion of your loan amount, the principal, as well every month. On a fully amortizing loan, your payment would be $477. The first $333 would go towards interest and the rest, $144, would go to pay down your principal. After your payment, your loan amount would be $99,856 ($100,000-$144).<\/p>\n

Other Mortgage Costs<\/h3>\n

When you are borrowing money, you should also pay attention to the fees and points that a lender charges. Annual percentage rate (APR) includes interest as well as fees so you can more accurately compare multiple lenders at once. Bundle suggests you also compare the “In 5 years” numbers on the Loan Estimate. The In 5 years numbers give you the total amount you’ll pay in interest and other loan costs over a five year period. This is a dollar amount instead of a percentage which is easier to understand for most home buyers. <\/p>\n

Read more on monthly mortgage mortgage payments here<\/a>.<\/p>\n

Use Bundle<\/a> to find your mortgage today.<\/p>\n

Read more Key Mortgage Terms<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

An interest rate is a percentage of a loan amount charged by a lender for the borrower to use the lender\u2019s money. Interest is the primary cost of your mortgage. Interest rates are typically shown as an annual number. A 4% interest rate means you will pay 4% of your loan amount to the lender […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"quote","meta":{"footnotes":""},"categories":[10,20],"tags":[],"yoast_head":"\nInterest Rate - Bundle<\/title>\n<meta name=\"description\" content=\"An interest rate is a percentage of a loan amount charged by a lender to the borrower. 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