Interest Rates

In exchange for giving a borrower the money for a loan, most lenders require the borrower to pay additional money, known as interest charges, every time the borrower makes a loan payment. Interest charges are the primary source of income for banks. The amount of interest they charge on each loan depends on a number of factors.

Factors that Determine Interest Rates

The most important factor in determining a borrower's interest rate is that person's credit history. A person with good credit history will have a lower interest rate, meaning that he or she pays less money in the long run than someone with a worse rate. When banks see someone with bad credit history, they see that person as a risk. Higher interest rates are a way to counterbalance the possibility of that person not repaying the loan.

The Federal Reserve plays an important role in the process as well. They set base interest rates for loans of various kinds, allowing the government to influence the lending and borrowing markets. Their influence on interest rates does have a direct effect on all lenders and borrowers, but in the long run you can still make a positive change in your financial wellbeing by improving your credit.

Contact Us

If you are struggling to make ends meet, resulting in missed mortgage payments and the threat of foreclosure, we may be able to help. By renegotiating your mortgage, you may be able to come to a new agreement with your lender that lets you keep your home. To discuss your case with the experienced Maryland mortgage modification attorneys, contact Chaifetz & Coyle, P.C. today by calling 443-546-4608.