An interest rate is the cost of borrowing money expressed as a percentage. For example, if you borrow money at a 5% fixed interest rate for a year, the interest charged will be 5% of the total amount borrowed. Your interest rate, along with the term and loan amount, determines the size of your monthly principal and interest payment.
When shopping for a mortgage loan, there are several factors that may affect your interest rate, including:
The Annual Percentage Rate (APR) represents the total cost of borrowing money for a mortgage - and includes certain closing costs, interest, finance charges and points - over the full term of the loan, expressed as an annual rate.
By helping you determine the true cost of your mortgage, the APR lets you compare different types of mortgages offered by different lenders. All lenders calculate the APR according to federal requirements and are required by law to provide the specific APR for your mortgage in the Truth in Lending disclosure.
Copyright 2013. Rick Plutchak. All rights reserved.
Equal Housing Lender. This financing is designed to assist you in selecting the loan program that most closely suits your budget. Financing is shown for comparison only. This is not an offer of credit or commitment to lend. Loans are subject to buyer/property qualification. Rates/fees are subject to change without notice. Cash reserves may be required for some conventional loans. DRE License #01259412 NMLS #333242.
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