Annual Percentage RateAPR, an acronym for the term  Annual Percentage Rate is a tool that consumers can use to better understand the finance offers they are reviewing. APR is often a term that is referred to in most finance contracts such as a credit card, auto or mortgage loan. This is a good way to compare the offer terms to ensure you are receiving the most favorable lending terms. Consumers who are shopping for a mortgage loans will want to ask to see a document called the truth in lending statement, this is the document for a mortgage where the APR is disclosed. The apr is used as a calculation to illustrate to a borrower the cost of borrowing money over the loan term including the borrowers closing fees (for a mortgage or loan that includes fees from the lender). If a loan has an APR that equals the interest rate of the mortgage, then this represents a loan with zero closing costs. If you are applying for a mortgage and the APR is higher than the mortgage interest rate (on a fixed rate mortgage loan) this should disclose to a borrower that they are paying closing fees. Assuming that a borrower is shopping and comparing mortgage offers, APR can help to guide a borrower in understanding the effect of the mortgage fees and true cost of borrowing money over an extended period of time. In some cases, having a higher APR may not be a bad thing as a consumer may be paying points to secure a lower rate mortgage. It is important to distinguish that a loans apr is not used to calculate the repayment, this is strictly based on the loans interest rate. Consumers often make the mistake of shopping strictly based on interest rate and not taking into consideration the loans total closing fees. Utilizing the APR disclosure can only help in trying to find the best overall mortgage offer. |
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Rates, News & Advice Articles
June 13, 2011
The stock market tried to mount a rally on Monday, but finished the day relatively flat, a growing signal that the pessimism in the market may be around to stay for the summer. The DOW was up almost 100 points in early trading action as investors were looking to buy into some bargains from the sell...
QRM Yet Another Federal Blunder In Fixing The Housing Market
QRM – Qualified Residential Mortgages is probably the dumbest idea the government has rolled out in the past 24 hours. An idea whose origination stems from the colossal collapse of the economy and U.S. housing markets would ensure the collapse of the American Real Estate Market. The simple economics...
June 4, 2011
The continued decline in stock prices, weakness in housing and the employment markets over the past sixty days has very few silver linings. The one area that has benefitted from the market changes is the mortgage market, where fixed home mortgage rates have continued to improve. Loan rates dropped to...
May 26, 2011
May has been a great month for the mortgage market as long term interest rates have moves substantially lower this month following a dip in bond yields. The ten year treasury bond move below 3.1 this week, over seventy basis points off of its high levels of the year. The correlation to fixed mortgage...