When you buy a home with a mortgage, you don't just pay back the amount that you borrowed, known as the principal. You also pay mortgage interest on the amount of the loan that you haven't yet repaid. This is the cost of borrowing money. How much you will pay in mortgage interest varies depending on factors like the type, size, and duration of your loan, as well as the size of your down payment.
Buying a home is probably the biggest purchase you’ll ever make. If you’re like most people, you won’t pay cash—you’ll borrow most of the money by taking out a mortgage. And over the life of the mortgage, you’ll pay a lot in interest.
Small changes in interest rates can make a big difference in how much you’ll pay. So it’s important that you understand what determines the interest rate on your mortgage, even if you already own a home.
