Q: What is the APR on my truth and lending form and why is it higher than the interest rate I agreed to pay? 
A: The interest that you agree to pay on a loan is only one of the overall costs of obtaining a mortgage. This rate is used by lenders to determine your monthly payment. The Annual Percentage Rate takes into account all of the interest and other costs (origination fees, discount points, and other expenses related to closing), and expresses them as a yearly percentage.
Comparing the APR to the interest rate is a good comparison when shopping for your mortgage, but keep in mind that this formula assumes that you will keep the loan for the full term and most homeowners sell their homes within 5-7 years. Getting a Good Faith Estimate from prospective lenders is a great way to compare all of the data so that you can make an informed decision.
Are you looking to buy a home? We would be happy to connect you with a knowledgeable local mortgage lender who can look at your financial situation and help you get pre-qualified. Click below or email us at concierge@lizmoore.com to get started.
Are you interested in hot real estate topics, tips and trends?
Click below to subscribe to our blog!
