Posted on: 20th Jun, 2011 08:48 pm
When I was shopping for mortgage for my new home. One mortage company told me about 3.875% interest rate, no origination fee, underwriting fee, discount point fee. The only thing I have to pay is apprasial and credit report and $400 application fee. Sounds very attractive, but, they have a abnormal high APR at 6%, but the loan officer keep saying there is nothing to do with my monthly payment.
What is the APR means, will that affect my cost somehow that the loan officer didn't tell me?
Should I go with another mortgage company which has a more normal APR but with more upfront fees?
Thanks!
What is the APR means, will that affect my cost somehow that the loan officer didn't tell me?
Should I go with another mortgage company which has a more normal APR but with more upfront fees?
Thanks!
Hi May!
Welcome to forums!
Annual percentage rate (APR) is used to describe the interest rate for a whole year rather than just for a month. It can also be defined as a finance charge expressed as an annual rate. You can contact another mortgage company and check out how much APR they are charging you.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Annual percentage rate (APR) is used to describe the interest rate for a whole year rather than just for a month. It can also be defined as a finance charge expressed as an annual rate. You can contact another mortgage company and check out how much APR they are charging you.
Feel free to ask if you've further queries.
Sussane
Hi Sussane,
So even that the 3.875 interest rate sounds good, with the high 6% APR, I still pay more in interest when compared to a lower APR?
E.g. if another loan company offered the same or slightly higher interest rate, but with the APR somewhere in the 4.XXX, and they charge about 1600 more upfront cost, what do you think? Will the monthly payment/ and the total interest I pay out on top of the principle similar in both mortgage companies, or the one with higher APR I need to pay more in interest overall.
Thanks Sussane!
So even that the 3.875 interest rate sounds good, with the high 6% APR, I still pay more in interest when compared to a lower APR?
E.g. if another loan company offered the same or slightly higher interest rate, but with the APR somewhere in the 4.XXX, and they charge about 1600 more upfront cost, what do you think? Will the monthly payment/ and the total interest I pay out on top of the principle similar in both mortgage companies, or the one with higher APR I need to pay more in interest overall.
Thanks Sussane!
The apr is the cost of the finance charge over the life of the loan expressed in a percentage. If there is no closing cost charges to you, where are they getting the finance charge to make your APR so high? Are you doing a 15 year loan? Message me with your details and I can explain.
Yes is a 15yrs fha, I feel wired as well for the high apr. But the loan Officer said I only have to pay processing fee like 400 n appraisal fee like 375. The discount point I have to pay is like 150. He said the apr has nothing to do with my cost and payment. He is going to send me the list of fees n truth in lending. Just the high apr makes me worry thinking maybe I should go for the one with more upfront fees like 1600 more but a more normal apr.
So will the high Apr affect my interest amount in the whole 15yrs?
Thanks a lot for the help! Appreciated!
So will the high Apr affect my interest amount in the whole 15yrs?
Thanks a lot for the help! Appreciated!
The apr is the total cost of the loan. The higher the APR, the higher your total payments will be. I do not understand how the spread is so high. I have never seen an apr that high in todays market. I have a feeling they bought down your rate to get you that low of a rate. So the costs involved to get that rate are affecting your APR. I would shop around some more. The closer the rate and APR, the lower the costs involved.
FHA loans have an Up Front Mortgage Insurance Premium (UFMIP) and the is included in the APR calculation for FHA loans. That makes FHA APRs look higher than one would normally expect to see.
Thank you all!!
You're welcome, May! :-)