bank quoted me interst of 6.4 and then APR 6.5??! (loan, interest rate, fees) - Mortgages -Lenders, loans, financing, rates, foreclosures, short-sales, brokers, credit score, deed, lien, refinancing, borrowers - City-Data Forum

austin_c0wboy · 06-01-2007, 09:27 PM

I went to BoA to get a good faith estimate for their Mortgage Plus Loan(no closing except 1.4pts on the loan). The lady showed me a slip with an interest of 6.4 and a APR 6.5. She was saying something like they both go hand to hand with the loan. Is she bsing me or maybe I wasn't clear enough about my loan requirements??!

palmcoasting · 06-02-2007, 02:11 PM

The APR takes into account the points/fees of the loan to give you the 'true' interest rate you are paying over the length of the loan. No, she is not bs'ing you.
What is an Annual Percentage Rate (APR)? (http://www.mtg-net.com/sfaq/faq/apr.htm - broken link) That is an explanation.

a3593 · 06-09-2007, 08:38 AM

If your int rate is 6.4 and apr is 6.5 that's not a bad deal.

mortgage_man · 06-11-2007, 12:06 PM

she just needs to know what apr is first. Most representatives from banks are not savvy. The apr takes into account closing costs. So any money you are paying into the loan, closing costs etc. are being accounting for. Rates are not sold at apr, they are sold without costs included. That should have been on the truth in lending statement that came along with the good faith estimate.

TimtheGuy · 06-11-2007, 03:01 PM

Quote:

Originally Posted by austin_c0wboy

I went to BoA to get a good faith estimate for their Mortgage Plus Loan(no closing except 1.4pts on the loan). The lady showed me a slip with an interest of 6.4 and a APR 6.5. She was saying something like they both go hand to hand with the loan. Is she bsing me or maybe I wasn't clear enough about my loan requirements??!

Think of the APR as the true cost of the financing. To get the financing you are going to have to pay interest AND any corresponding costs. If there are no additional costs the APR will be the exact same as the interest rate.

If you pay a bunch of points to buy the rate down, your interest rate might be 6.4% and the APR might be 7.4%.

For mortgages there are certain closing costs that must be calculated into the APR, so the APR is almost always higher than the interest rate.