Annual Percentage Rates
I had recently met with a client who had a dented mortgage history recently, I saved him over $10,000 in Fees from his prior company and over 1.25% off the rate they quoted him, all on a fixed rate program. The problem is I received a phone call from him, and it was the usual question, of what is this APR Rate, I didn't agree to this rate, well as I explained to him what an APR is, he seemed to calm down but everyone should understand what an APR is.
The below content is not copyrighted and I am only explaining definitions and explanations of an APR..
Annual Percentage Rate (APR) - APR is the cost of credit, as a yearly rate. It includes interest as well as other charges.
Annual Percentage Rate (APR) - APR is the cost of credit expressed as a percentage. An example is, if you have a Rate of 15% you may have an APR of 21% ( All finance charges are rolled into the APR)
Now for consumers this is a a warning about APR Disclosures
* Annual Percentage Ratescan only be calculated based on your specific loan amounts and the final closing statements, if any cost should change even a hair then the APRwill change, Now when you receive a disclosure in the mail the APR that's disclosed on there will probably change before closing, because we don't know the bottom line figure until closing. It's not suggested to make a final decision on any lender, based on the APR quoted, APR's on the truth and lending are often wrong.
As it has been stated, This is HUD's recommendation when looking for a loan- if you see two loan products understand that they both may look alike, but the APR's may be different, so it's important to understand again APR's change.
You cannot decide against a loan because a disclosure reads a slightly higher APR , best advice is work with your broker and or get a attorneys definition on APR if you don't understand yourself..
Good reading, and if you would like to know more about APR's please contact myself anytime at tom@provagio.com - 561-968-6683 or 561-310-0315
Thomas R. Weiss
Licensed Mortgage Consultant
www.provagio.com
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