Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: May 24, 2011

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A central aspect of any home mortgage loan is the corresponding interest rate, which, together with various fees charged for accessing the loan, constitutes the cost of borrowing money for the purchase of a home. Interest rates are largely subject to the climate of the real estate market and the economy in general, but individual aspects of potential borrowers are also responsible for manipulating available rates.

Mortgage rates have varied between as much as 20 percent or more and as little as five or six percent for some borrowers within the last few decades, demonstrating the substantial volatility of mortgage loan rates; for this reason, borrowers may wish to seek out fixed-rate loans that lock in interest rates.

Personal financial circumstances involved in the determination of interest rates include a borrower’s credit score and the amount of their existing debts as compared to their income. While some types of loans may be approved without a credit check, lenders typically insist on performing a check for mortgages given the size and duration of these loans. The higher a borrower’s income and the lower their existing debt, the more forgiving interest rates for home loans are likely to be.

Repayment terms, such as whether the loan will be repaid in 10, 15, 30 or more years, can also affect interest rates. Average terms include a repayment period of approximately 15-25 years. The size of the down payment on the property, and thus the amount of money to be borrowed, influences the interest rate, as well. Not all determining factors of home loan interest rates can be controlled, though some can be modified by borrowers to enjoy better rates.