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What is the Difference Between APR and Interest Rate on A Mortgage?

For first-time homebuyers, the terms can sometimes be confusing.  There are so many things to learn, it can seem like a full-time job if you don’t work with a strong mortgage company that explains all of your options and helps you to build a mortgage that suits them.  We love educating people on what their mortgage options really are, so today we’ll talk a bit about the difference between APR (Annual Percentage Rate) and Interest Rate, and how they affect your mortgage.
APR
An annual percentage rate (APR) is a broader measure of the cost to you of borrowing money. The APR reflects not only the interest rate but also the points, mortgage broker fees, and other charges that you have to pay to get the loan. For that reason, your APR is usually higher than your interest rate.
These also include mortgage insurance premiums, but not other payments to third parties, such as payments to title insurers or appraisers. This lets you know exactly what you will pay monthly on your mortgage (you can use our mortgage calculator to see your payment!) We always go over these options with you so that you understand what you are signing.
Interest Rate
The interest rate is the cost you will pay each year to borrow the money, expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan. You always want to find out what your APR is, because that is what actually shows your monthly payment more accurately. The interest rate is merely a part of the APR.Hopefully, this will help you when you’re discussing your mortgage with your loan officer or mortgage company. If you want to deal with a mortgage company that will always show you all of your options before you sign, call The Home Loan Expert, Ryan Kelley, today.
Call The Home Loan Expert Team in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515, Nashville at (615) 810-8555 or Birmingham, AL at (205)721-7656. You can always apply online at hero.loan for your VA Loan, and www.thehomeloanexpert.com for your other mortgage needs, and we’re also open on Saturdays and will come to you to help close your loan. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?

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