Understanding APR’s and Interest Rates
Your annual percentage rate (APR) is a measure of how much it will cost to borrow money. Your APR reflects the total cost of the interest rate, as well as other expenses incurred such as points, broker fees, and more. APR’s prevent lenders from hiding costs. Borrowers should look for a small spread between an interest rate and APR.
How Your APR is Calculated?
Does an APR Reflect All Costs and Conditions?
One important item to note is that an APR may not reflect specific costs or conditions, such as pre-payment penalties or the length of time your rate is locked. Federal law does not clearly specify what must be included in an APR, and as a result, APR’s will vary from lender to lender. While your APR is a great way to make comparisons when buying a home or refinancing, it’s important to consult a mortgage professional before making your final decision.
Mortgage bankers at Benchmark Bank, can offer you expert insight on interest rates and APR, as well as answer any additional questions you have.