A.P.R. ,Points & other Mortgage Terms


APR ,  Annual Percentage Rate 

APR is a measurement of the cost of a loan including interest and loan fees expressed as a yearly percentage rate. It's intent is to  provide consumers with a basis for comparing the cost of loans.  Because of government guidelines, some costs are not required to be included in the APR and some are. For example, the cost of an appraisal and the cost of a title search are not calculated in the APR.  Until ALL costs are required to be calculated , it is not a reliable indicator of total cost , but only one of many factors involved in  choosing the correct mortgage.

Charges or fees  paid in advance (Prepaid interest) assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g., two points on a $100,000 mortgage would cost $2,000).  Points are interchangable with terms like Origination fee , broker fee, Loan Discount fee etc. The sum total of these charges are expressed as the total points (or fees) that go directly to the mortgage company or the Lender to obtain your interest rate . You can get a lower interest rate by paying more points and conversely you can avoid points by paying a higher interest rate for the life of the loan. The right combination of rate and points is a personal choice influenced by your goals , such as lower monthly payments as opposed to lowering you loan balance faster(building up equity),  loan size and expected length of time you expect to keep the loan.     


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