House hunting can be so much fun! Counting bedrooms, admiring the view, scoping out the neighborhood, mentally arranging a house full of brand-new furniture.

House hunting can be so much fun, however, that it’s quite tempting to overlook the business aspect of the purchase. The business aspect is, of course, the mortgage payment and the rate of interest used to calculate that payment.

The rate of interest a mortgage lender charges to finance a home is often referred to as the home mortgage rate. This number is a percentage that determines the dollar amount of interest that must be paid, in addition to the principal, which is the actual cost of the home itself.

It’s often the home mortgage rate that is the determining factor in whether or not a buyer becomes approved, or qualified, to purchase a particular home.

When a home seems to be priced affordably, the home mortgage rate can affect the monthly payment to such a degree that the mortgage loan may be denied due to the increased burden of the projected mortgage payment.

Several factors affect home mortgage rate calculations. The amount of down payment made at closing affects the dollar amount of the sale price which needs to be borrowed. The bigger the down payment, the less the less principal money to borrow.

The method by which the home mortgage rate is calculated also affects the buyer’s chance of approval. Some mortgages are calculated at a fixed rate of interest, which means every monthly mortgage will remain the same throughout the term of the loan.

Other home mortgage rates are adjustable. This means the interest rate on the loan is adjusted every year to reflect the changing economic outlook of the financial market. Monthly mortgage payments will be the same throughout a given year but are subject to change every year.

Before falling in love with any house found while house hunting, very serious consideration must be made to the home mortgage rate. This rate will not only determine which house we buy, it will also determine how much brand-new furniture we can move into it.