Fixed Rate Mortgages

One of the most common forms of lending money is in the real estate and housing market under the form of mortgages. A mortgage is not a loan per se, but rather the transfer of interest in (usually) real estate to the lender as a security guarantee that a loan will be repaid with all due interest. While mortgage loans can be taken out on properties already owned and paid for by the borrower, it is most common in many places to buy land or a house using a mortgage, since the average person often doesn’t have the funds necessary to pay for a house all at once. Mortgage loans, like virtually all other forms of loans, come with their own interest rates, or APR. These depend of course on the amount of money borrowed, and most importantly, on the creditworthiness of the borrower. If you want to take out a mortgage loan on your house or land, or are planning on buying real estate through a mortgage, be aware (if you aren’t already) that the rates on loans offered to you will be based primarily on your credit history, i.e. your financial record of paying bills in a timely manner. For more on the effects of credit history and credit scores on people’s ability to borrow and the interest rates of loans offered, check out the “Rates and Credit History” section on this site.

In the United States, many mortgages are re-sold by the mortgage lenders to one of the government-supported mortgage giants, Fannie Mae and Freddie Mac. These companies, as well as the mortgage market in general, have seen a lot of storms and controversy since the sharp downturn in the housing market in 2008.

If you would like to purchase a house using a mortgage loan but have an average or below-average credit history, you may be able to qualify for sub-prime mortgages with high interest rates, but these are obviously more expensive and riskier than the prime mortgage market. For the page dedicated to discussing sub-prime rates and what they entail, see the “Sub-Prime Rates” tab above.