The importance of interest rates is sometimes a misunderstood concept. But when thinking about reﬁnancing it’s the single most important factor in making a good decision for your ﬁnances and peace of mind.
Simply put, the interest rate is the percentage-based fee your lender charges to make the loan to you. Your payment is made up of both principal, or the amount you borrowed, plus the interest charged. The Annual Percentage Rate (APR) is also a percentage, but it also includes all the costs of ﬁnancing, including any fees and charges that you have to pay to get the loan. The APR for a given loan is typically higher than the interest rate, but your monthly payments are based on the interest rate, not the APR.Why do interest rates go up and down?
Interest rates move up and down depending on a number of factors including the strength of the economy, the lender’s costs, and your personal credit score. Base rates are established by the Federal Reserve bank in Washington D.C., which is constantly monitoring the growth of the economy. Individual lenders construct their interest rates based on the type of loan and other risk factors. While you can’t inﬂuence the base rate, you can deﬁnitely beneﬁt by working to build and maintain a high credit score.
Even if you have less than perfect credit, there are loan types that can help you save money and get out of debt faster.
Whether you want to take out cash, reduce your term, or simply lower your monthly mortgage payment by lowering your interest rate – we’ve got you covered.
|Credit Score||30 Year Fixed Rate||15 Year Fixed Rate||5/1 Adjustable Rate|
|Needs Improvement (540-579)||6.2%||5.8%||NA|
Sometimes you need money to tackle a home improvement project, consolidate debt, or just take advantage of an opportunity. Interest rates can vary based on your credit score and other factors.
|Credit Score||Personal Loan APRs|
|Excellent (720-850)||10.3% – 12.5%|
|Good (620-719)||13.5% – 19.9%|
|Fair (580-619)||20.9% – 28.9%|
|Needs Improvement (540-579)||29.9% – 34.9%|
|Poor (300-539)||35.9% – 99.9%|
A home equity loan lets you borrow a portion of your equity to pay off high-interest loans, start a home improvement project or fund an important purchase.
|Credit Score||Fixed Rate||HELOC|
Sometimes consolidating high-interest loans into a single, lower interest rate loan makes the most sense. If you own your home, chances are you have built up equity which you can borrow against in a Cash-Out Mortgage Reﬁnance solution.
But don't worry, there are debt consolidation options available even if you don't own your home. If you ﬁnd yourself in this situation a personal loan might be your best option.
Go here to see the current interest rates for each type of loan.
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