It is known that getting a mortgage loan for a home in Albuquerque NM or anywhere can be confusing and sometimes frustrating. Ahh who am I kidding, it is always frustrating and one of the most common question we have is what is an Annual Percentage Rate (APR). Below is one of the definitions offered.
The interest rate is the cost of borrowing the principal loan amount. It can be variable or fixed, but it's always expressed as a percentage.
The APR is a broader measure of the cost of your mortgage because it reflects the interest rate, as well as other costs such as broker fees, discount points and some closing costs. The APR is also expressed as a percentage.
Let us break this down. Most buyers look for the best interest rate, actually the best fixed interest rate. This is the interest rate that will carry through for the life of the loan. This rate determines the monthly payment that you will have so the lower the better. As important as this is the cost to get that low interest rate is VERY important.
This is where the APR comes in. Not all mortgage lenders work in the best interest of their borrower which is you. They can charge outrageous fees to get you that low interest rate which increases your APR. The APR only exists for the first year of your loan because it includes your fixed rate and the cost for the loan with determines the Annual Percentage Rate. Since those initial costs are not for the life of the loan the APR effectively 'goes away' and now you only have the fixed interest rate.
If you need a great local recommendation for a Mortgage Lender please call Jessica Haselby at Pinnacle Capital Mortgage (505) 907-2472.
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