Mortgage Interest Rates and A.P.R.
Navigating mortgage interest rates and A.P.R.s
What’s more important, your interest rate or your Annual Percentage Rate (A.P.R.)?
This is a common question many borrowers have when navigating the loan process. While it’s important to receive a low interest rate, it’s even more important to understand your A.P.R., the “true cost” of your loan.
An A.P.R. includes:
- Your interest rate
- Additional fees
- Terms of your mortgage
An A.P.R. prevents lenders from hiding costs. Borrowers should look for a small spread between an interest rate and A.P.R.
It’s important to note that an A.P.R. may not reflect certain 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 go into an A.P.R. Hence, it varies from lender to lender.
While your A.P.R. is a great tool for making comparisons when buying a home or refinancing, it’s best to consult a mortgage professional before making your final decision.
Mortgage bankers at Loan One, a division of The Union Bank Company, can offer you expert insight on interest rates and A.P.R., as well as answer any additional questions you have.