We’re living in extraordinary and unusual times in 2020. And, if you’re in the market for a home as well, it can add a whole other dimension to the buying process. Indigo Mortgage Colorado wants to advise you on the difference between an interest rate and an APR (Annual Percentage Rate) and why it’s important that you know what an APR represents.
The difference between an APR and an interest rate is that the APR is the total cost of the loan, including the interest rate and fees. The interest rate is the amount of interest a lender will charge for borrowing the loan minus the administrative costs. An APR is closer to what a loan will actually end up costing you. The APR is also always higher than the interest rate. If you get an interest rate offer from two lenders and one has a higher APR than the other, that means there are more closing costs being added to the loan. A mortgage lender with a lower rate is not always the best deal for the borrower if its costing thousands of dollars to buy it down. The further away the APR is from the actual interest rate the more it will cost to secure that rate.
Indigo Mortgage Colorado wants you to know, that when you’re in the market, asking for an APR is a great tool for consumers to shop their mortgage around. So shop that mortgage around, ask for the APR and as always shop local!