Interest Rates Explained: What Buyers Really Need to Know
Written by Gillian Gooch • October 2 2025
When I sit down with buyers, one of the first questions I hear is, “So what’s the interest rate right now?” It’s an important question — but often, the conversation stops there. The truth is, interest rates aren’t just a number on paper. They’re one part of the bigger picture of homeownership, and understanding them can help you move forward with clarity and confidence.
What Is an Interest Rate, Really?
An interest rate is simply the cost of borrowing money. When a lender gives you a mortgage, you’re borrowing the purchase price of your home. The interest rate is the percentage they charge for lending you that money — like “rent” for the loan.
Even a small change in rate can impact your monthly payment and how much you’ll pay over the life of the loan. That’s why buyers hear so much talk about rates in the news.
Fixed vs. Adjustable Rates
Not all loans are created equal.
Fixed-Rate Mortgage: Your rate stays the same for the life of the loan. That means predictable payments month after month.
Adjustable-Rate Mortgage (ARM): The rate starts lower but can change after a set period of time. These loans can be a smart option for buyers who are working on building credit, just starting their careers, or expect their income to grow. The lower initial rate can make homeownership more affordable right now, and many borrowers later refinance into a fixed-rate loan once their financial picture strengthens.
For many families I work with, the peace of mind of a fixed rate is worth it. But for others, the flexibility of an adjustable rate provides a pathway into the market while they work toward long-term stability.
What Influences Rates?
Rates aren’t random. They’re influenced by several factors:
The Federal Reserve (when they raise or lower key rates, mortgage lenders often follow)
Inflation (higher inflation often means higher rates)
Your personal financial picture (credit score, debt-to-income ratio, down payment size, and loan type all play a role)
This means two buyers can apply for a loan on the same day but receive different rates.
Why This Matters for You
Understanding interest rates isn’t about memorizing numbers — it’s about knowing how they affect your buying power. Rates may rise or fall, but your personal readiness (steady income, savings, and financial peace) will always carry more weight than chasing the “perfect” number.
Faith Over Fear
Markets shift. Headlines change. But one thing never changes: God’s timing is perfect. If you feel led to pursue homeownership, the right doors will open. My role is to walk with you, explain the process clearly, and make sure you’re prepared — whether rates are high, low, or somewhere in between.
In faith and service,
Gillian Gooch, Realtor®
Gillian Gooch Properties