A mortgage rate is the interest rate charged on a loan used to purchase a home. This rate determines how much a borrower will pay in interest over the life of the loan, affecting monthly payments and the total cost of the home. Mortgage rates can vary based on factors like the borrower's credit score, the loan amount, and the overall economic environment. Mortgage rates can be fixed or adjustable. A fixed-rate mortgage has a constant interest rate throughout the loan term, providing predictable payments. In contrast, an adjustable-rate mortgage (ARM) may change after an initial fixed period, potentially leading to lower initial payments but increased costs later on.