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APR Definition For Mortgages

Sunday, February 13, 2011 - 11:12 AM
A good overview of APR, interest rates and mortgages from the New York Times:
The A.P.R., which is often half a percentage point or more higher than the interest rate, or the cost of the loan itself, factors in other major costs, like the origination and loan processing fees.
[...]
The key thing to know is that the A.P.R. typically does not factor in third-party costs like those for a credit check, appraisal, survey, inspection or title insurance.



2
Ken TuminKen Tumin5,468 posts since
Nov 29, 2009
Rep Points: 125,029
1. Sunday, February 13, 2011 - 2:56 PM
While I note the APR compared with the interest rate (a large difference might indicate there are some significant fees, whereas a small difference is inconclusive), when comparing one possible mortgage loan against another, I look at both the interest rate and the dollar amount of all fees.  Lender fees might even be negotiable in some cases.  Sometimes certain third party fees are just estimates and can vary based on the provider, such as an appraiser or title company.

I'd rarely if ever use APR alone as a way comparing mortgage loans.
2
glxpassglxpass38 posts since
May 2, 2010
Rep Points: 240
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