Mortgage interest rates vary among banking institutions and mortgage lenders. It is important to know that there is no one mortgage rate a home buyer must choose before accepting a loan. There are several factors that will influence one's mortgage interest rate including the following:

• Credit score
• Banking Institution Policy
• Type of loan

When shopping for a mortgage, a home buyer may come across federally sponsored mortgages such as those administered by the U.S. Department of Housing and Urban Development (HUD), or mortgages originating through facilitation of the secondary mortgage market, i.e., Government regulated public mortgage lenders such as Fannie Mae.

Mortgages originating from these sources tend to favor the home buyer in terms of affordability but are also subject to stricter loan application requirements.

In addition to Government derived and/or regulated mortgages are corporate mortgages originated through publicly traded companies such as Countrywide Financial Corporation and Bank of America Corporation. Mortgage loans from these companies may not have the same paperwork requirements and interest rates as federally affiliated loans.

After a home buyer has decided which company or institution to obtain a mortgage from, several loan packages may be available. Each loan package can have different financial goals, requirements and pre-requisites that may influence the interest rate and future payments on the mortgage. Below are several types of mortgages with differing interest rate options:

• Adjustable Rate Mortgages (ARM's): Mortgages with this type of interest rate set up can 're-adjust' periodically causing the monthly payments for these types of loans to increase significantly.
• Interest Only Loans: These types of loans only require interest payments at the front end of the life of the loan which could mean lower monthly payments for the home buyer.
• 15 & 30 year Fixed Rate Mortgages: These types of mortgages include interest and principal payment in the monthly mortgage contributions. The rates vary according to the length of the loan and economic conditions at the time of loan.

Individual home buyers often have unique financial situations that may be suited to a specific interest rate package. For example, if a homebuyer is able to make larger monthly payments, a 15 year mortgage at a lower fixed rate may be the best choice. If one is unable to make larger payments, the longer term mortgage is an option but interest rates will typically be higher than with the 15 year mortgage.

Adjustable Rate Mortgages may be good for savvy house flippers who don't intend to hold a house long and can handle adjustments in interest rates and/or have a good grip on mortgage rate forecasts. These types of loans can be risky if the homebuyer is on a fixed budget and cannot afford an increase in the interest rates.

Interest rate only loans are great if one's home is expected to appreciate in value a great deal. Since no payment is applied to the principal value of the loan the only equity that is acquired in the house is due to appreciation of value. This may also be a good option to home buyers who expect an eventual rise in income or would prefer lower monthly payments.