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Old 06-13-2013, 03:11 PM
 
2 posts, read 9,893 times
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My interest rate is 3.875% but apr 5.516% WHY
i buying home, it is FHA 30 year
i attached the document i received from my lender, does anyone from this can understand why such a big differentiation.
is my mortgage person cheating me

SEE ATTACHED GOOD FAITH ESTIMATE
Attached Thumbnails
My intrest rate is 3.875 but apr 5.516 WHY-new-gfe-til-1.jpg   My intrest rate is 3.875 but apr 5.516 WHY-new-gfe-til-3.jpg   My intrest rate is 3.875 but apr 5.516 WHY-new-gfe-til-4.jpg   My intrest rate is 3.875 but apr 5.516 WHY-new-gfe-til-5.jpg  
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Old 06-13-2013, 03:38 PM
 
3,805 posts, read 8,869,119 times
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ANNUAL PERCENTAGE RATE
This is not the Note rate for which the borrower applied. The Annual Percentage Rate (APR) is the cost of the loan in
percentage terms taking into account various loan charges of which interest is only one such charge. Other charges
which are used in calculation of the Annual Percentage Rate are Private Mortgage Insurance or FHA Mortgage Insurance
Premium (when applicable) and Prepaid Finance Charges (loan discount, origination fees, prepaid interest and other
credit costs). The APR is calculated by spreading these charges over the life of the loan which results in a rate higher
than the interest rate shown on your Mortgage/Deed of Trust Note. If interest was the only Finance Charge, then the
interest rate and the Annual Percentage Rate would be the same.


Having said that, your Origination charge looks a little high. Can you post the doc that says on top: Federal Truth-In-Lending Disclosure – Itemization of Amount Financed?
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Old 06-13-2013, 10:27 PM
 
2 posts, read 9,893 times
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is that the one?
Attached Thumbnails
My intrest rate is 3.875 but apr 5.516 WHY-doc006.jpg  
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Old 06-14-2013, 08:17 AM
 
134 posts, read 352,336 times
Reputation: 209
Quote:
Originally Posted by nbaryosef View Post
My interest rate is 3.875% but apr 5.516% WHY
i buying home, it is FHA 30 year
i attached the document i received from my lender, does anyone from this can understand why such a big differentiation.
is my mortgage person cheating me

SEE ATTACHED GOOD FAITH ESTIMATE
APR counts in all factors over the life of the loan. The interest rate is everything you pay on the principal. Per year you pay 3.875% interest on the remaining loan balance.

The APR adds in additional cost factors such as what you pay in mortgage insurance and all upfront costs amortized over the life of the loan. Since FHA typically has higher premiums for MI and higher closing costs this figure is higher than conventional loans. I would expect to see around 5-5.125%APR but your closing costs seem rather high.
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