Let's start with the story of a family looking for a three-bedroom home in Madison. When they went to the bank for pre-approval, the 30-year fixed rate they were offered was different from the rate presented two months later when they made their actual offer. We'll first look at what changed during those two months.

Between the pre-approval and the offer, the most significant movement was in the 10-year Treasury yield. Mortgage loans tend to follow this yield since their average maturity is similar to that of Treasuries, and during those two months, inflation indicators were reported higher than expected, causing a reaction in the bond market overall. As a result, the required yield levels in the mortgage-backed securities (MBS) market also increased.

Additionally, the market's interpretation of the Federal Reserve's monetary policy direction also had an impact. Even if the Fed does not adjust the benchmark interest rate immediately, if market expectations about future policy direction change, mortgage rates often move first.

The figures this family confirmed two months later were in the mid to high 6% range for the 30-year fixed rate based on Freddie Mac's PMMS for mid-2026, while the 15-year fixed rate was lower than that. They considered switching to a 15-year fixed rate while consulting with the lender, but ultimately proceeded with the 30-year fixed rate as the monthly payment exceeded their budget. A 15-year fixed rate significantly reduces total interest burden, but it becomes a realistic choice only if there is enough capacity for monthly payments.

The lender also provided information about ARM products. These start with a lower rate than a fixed rate for the first five years, but since this family planned to stay long-term in Madison, they chose a fixed rate considering the risk of future rate adjustments. In cases of short-term residence or clear refinancing plans, an ARM could be a more advantageous choice.

The actual rate this family received was determined based on their credit score results. One spouse had a credit score in the 770s, while the other was in the 690s, and in a joint loan application, the lower score had a more significant impact. This case illustrated that the final interest rate could vary by about 0.5 to 1 percentage points depending on the credit score range.

Madison is a region with many stable jobs related to universities and state government, so Korean households with clear income documentation tend to have a relatively smooth loan approval process. However, the lower the down payment ratio, the more private mortgage insurance (PMI) costs are added, so it's good to calculate this aspect as well.

Ultimately, what can be confirmed from this family's case is that the interest rate is determined by the market conditions at the time of the contract and the individual's credit conditions. It is practically helpful to avoid misunderstanding the pre-approval rate as the final rate and to make a habit of checking again just before the offer.