The interest rat on your mortgage loan note is the rate of interest you are obligated to pay on the outstanding balance for the term of the loan.
The APR is a reflection of the cost of borrowing the money expressed as an interest rate. As a rule of thumb, the closer your APR is to your interest rate, the less you are paying for the financing. This is the government’s way of allowing you to compare lenders by the costs of financing.
the APR includes not only the stated interest rate for the mortgage loan (the”Note Rate”), but treats all of the up-front and included costs of the loan (loan fees, document fees, closing fees) as if they, too, were INTEREST…so the APR is the NOTE RATE + COSTS spread out over the life of the loan.
This confusing system was developed by the Federal government in an attempt to give the consumer a picture of the TRUE COST of the credit loan.
2 Responses to what’s the difference between the interest rate ona mortgage and the apr on the truth and lending disclosure
mazziatplay
April 24th, 2010 at 5:17 pm
The interest rat on your mortgage loan note is the rate of interest you are obligated to pay on the outstanding balance for the term of the loan.
The APR is a reflection of the cost of borrowing the money expressed as an interest rate. As a rule of thumb, the closer your APR is to your interest rate, the less you are paying for the financing. This is the government’s way of allowing you to compare lenders by the costs of financing.
Nancy Kay
April 24th, 2010 at 5:42 pm
the APR includes not only the stated interest rate for the mortgage loan (the”Note Rate”), but treats all of the up-front and included costs of the loan (loan fees, document fees, closing fees) as if they, too, were INTEREST…so the APR is the NOTE RATE + COSTS spread out over the life of the loan.
This confusing system was developed by the Federal government in an attempt to give the consumer a picture of the TRUE COST of the credit loan.