When it comes to a mortgage, what is the difference between the nouns rate (ex. 5.5%) & the APR (ex. 6.5%)?
Why are there two different rates and how do they figure into the mortgage?
Thanks!
Answers:
Hard to explain but your rate is 5.5% the APR is where on earth the closing costs that are considered interest charges are added in. This is only the first year, after that you are spinal column to the 5.5. This is a large difference which tells me your closing costs on this loan be very high. However, you can discount the origination fee from your taxes in the year you salaried them (year the loan closed.). Source(s): 22 years mortgage business.
The APR (Annual Percentage Rate) is set by the government.
However, mortgage companies can set their own rate if they want that's where you take you 5.5%.
Rates by mortgage companies set different rates for different terms.
EX] 15 year is 5.5% 30 year is 6.5% (fixed)
Variable rates are even lower however can come back to bite you at a after that time.
Then there are ballon rates which are very low but when the ballon residence expires you will be hit with a huge ballon payment and the rate will walk way up. Hence, the Sub prime loan chrisis. Never get a ballon loan or a unreliable rate.
Fixed rates are the best, if the APR goes down you can always refinance.
Related Questions:
What is the interest rate on a 15 year fixed mortgage?
According to bankrate.com, 15-year fixed conventional mortgages are at 4.62% today I can do one for 4.375% for a conventional loan, and about 4.875% for FHA. I haven't done one of those lately, so not sure. I can actually do lower...
Thanks!
Answers:
Hard to explain but your rate is 5.5% the APR is where on earth the closing costs that are considered interest charges are added in. This is only the first year, after that you are spinal column to the 5.5. This is a large difference which tells me your closing costs on this loan be very high. However, you can discount the origination fee from your taxes in the year you salaried them (year the loan closed.). Source(s): 22 years mortgage business.
The APR (Annual Percentage Rate) is set by the government.
However, mortgage companies can set their own rate if they want that's where you take you 5.5%.
Rates by mortgage companies set different rates for different terms.
EX] 15 year is 5.5% 30 year is 6.5% (fixed)
Variable rates are even lower however can come back to bite you at a after that time.
Then there are ballon rates which are very low but when the ballon residence expires you will be hit with a huge ballon payment and the rate will walk way up. Hence, the Sub prime loan chrisis. Never get a ballon loan or a unreliable rate.
Fixed rates are the best, if the APR goes down you can always refinance.
Related Questions:
What is the interest rate on a 15 year fixed mortgage?
According to bankrate.com, 15-year fixed conventional mortgages are at 4.62% today I can do one for 4.375% for a conventional loan, and about 4.875% for FHA. I haven't done one of those lately, so not sure. I can actually do lower...