You hear about interest rates on the news, but what does it really mean and how may it affect your financial decision-making? Interest rate is a fee you are charged for borrowing money as a proportion of the total loan. This is expressed as a percentage of the total amount of the loan. Interest rates are important to consider when planning for a mortgage and yet, are just one of many important factors to consider. Do not confuse interest rate for “A-P-R.” The annual percentage rate is a broader measure of the cost of a mortgage because it expresses the true cost of borrowing money over time. Third party fees, discount points and certain other closing costs affect the APR. This is a great tool to utilize when it comes to comparing overall fees charged by different lenders across varying loan programs. Looking at interest rates and A-P-R’s, an interest rate can determine how much you will pay on a monthly basis based on the loan amount while an A-P-R can provide you with clues as to what fees are included in the loan terms. And even still, these 2 factors alone do not tell the whole story. Learn about mortgage money. The details matter… Ask us how.
*Not intended as real estate, accounting or investment advice. Contact your financial representative for more information.