How do I understand my mortgage rate? - Movement Mortgage Blog

Did you ever think you’d need to dust off the old math books to understand the home buying process? It can be confusing when talking terms like mortgage rates and calculating how they play into your home expenses. We’re taking the confusion out by answering your mortgage rate questions.

What’s a mortgage rate?

Simply put, a mortgage rate is the rate of interest charged on a mortgage. It can be a fixed-rate mortgage (FRM) meaning it doesn’t change, or an adjustable rate mortgage (ARM) meaning it fluctuates during the loan’s life.

Another aspect of mortgage rates is they may vary depending on your credit. The better your credit, the better your rate. And, the better your rate, the lower your payment.

What does a one percent rate increase mean?

Even a one percent mortgage rate increase can lower your buying power. With each percentage increase, your budget is lowered. The price difference on a home at a four percent interest rate compared to a five percent interest rate may not seem like a lot of money upfront but can add up over the life of the loan.

For example, a one percent rate increase on a 30-year mortgage with a 20 percent down payment could result in only $100 added to your monthly payment, but could add up to an outrageous number like $33,000 in interest over the 30 years. Talk about a rate hike!

Do I wait for rates to lower?

You may think you need to wait for rates to lower before buying, but it’s hard to try and figure out market timing. Rates fluctuate daily, so you can’t guess what they’ll be and that shouldn’t deter you from buying a home.

If you quite simply can’t afford your original purchase price due to rising rates, consider your options. An adjustable rate may suit your short-term needs better than a fixed rate and save you money.

It’s important to understand the costs associated with your home like mortgage rates so you can make the best choice for yourself. When you have questions, reach out to your home buying team and they’ll gladly answer them. Don‘t have a team yet? Speak with a Movement loan officer in your area to know your home buying options.



About the Author:

Adam O'Daniel

Adam O'Daniel is Movement's Communications Director. He leads corporate communication and public relations efforts across the organization. Email him at