Understand mortgage interest rates

• How can I get the best mortgage rate possible?

  Mortgage rates can be influenced by broader market conditions, which are often out of your control, as well as specific aspects related to your loan and property. The type of loan you choose, the state where the property is located, the type of property, the purpose of the loan and the loan-to-value ratio all play significant roles in determining the interest rate you might be offered. But that doesn’t mean there's nothing you can do to secure a better rate. Factors like your credit score, loan type, down payment and overall financial picture also play a role. While rates can’t be guaranteed, improving your credit score, lowering debt and comparing loan options could help you secure a better rate.

• How can I lower my monthly mortgage payment?

  There are a few ways to bring your payment down. Here are options you could consider: recast your mortgage by making a one-time lump-sum payment toward your principal, ask to remove private mortgage insurance (PMI) if you've hit 20% equity, appeal your property taxes if you think your home’s assessed value is too high, or shop around for lower homeowners insurance premiums. You could also look into modifying your loan or refinancing to get a lower interest rate or a longer repayment term.

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• Does a lower interest rate mean paying less over time?

  Generally, yes. A lower interest rate could reduce both your monthly payment and the total amount of interest you pay over the life of the loan. However, refinancing to a lower rate doesn’t always lead to long-term savings. Extending your repayment term, for example, could increase the total interest paid even if your monthly payment goes down.

• Is a 15-year mortgage better for long-term savings?

  A 15-year mortgage could save you money over time since shorter loans often come with lower interest rates. Keep in mind, the monthly payments will be higher compared to a longer-term loan. If you’re looking for lower monthly payments, a 30-year mortgage might make more sense. The best choice comes down to your budget and financial goals.

• Should I refinance to get a better rate?

  Refinancing replaces your current mortgage with a new loan, which may offer a lower interest rate or a longer repayment term. Refinancing may or may not lower your monthly payments or save you money over time. It just depends on the terms of the new loan. Refinancing also comes with closing costs, so you’ll want to weigh the upfront expense against the savings.