Interest Rate Definition
The percentage of money lent out that is added to a loan balance. Interest rates are almost always compounded annually, so they are commonly called Annual Percentage Rates, or “APR.” For borrowers, a low interest rate is ideal, while high interest rates bring more money to lenders. Interest rate is essentially how banks and lenders earn an income from lending money; if they could not earn interest, they would have no reason to offer mortgage loans. Many borrowers seek FHA Streamline Refinancing to reduce the interest rate they pay every year.