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How much do the fees (points) on the back end of a mortgage, effect the total price? I was told even at 3.87% I will still be looking at payment like a 4.25% loan. by maikelnai540 from St. Petersburg, Florida. May 31st 2019 Reply

Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,409 contributions

You are referring to APR (annual percentage rate). APR takes your actual rate (in this example, 3.875%), then factors in closing costs, and mortgage insurance (if applicable) to give you APR, which is really a shopping number. If two lenders tell you the same base rate, looking at the APR will tell you which one is charging you more for the same base rate. APR is one of the most confusing things out there. Read my article on APR at for more information. I lend in MN, WI, and SD. NMLS274132

Jun 2nd 2019
William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,728 contributions

Joe's explanation is good, but let me add that there's a big difference between the "Note Rate" and the "APR" Rate.. The APR rate is a government calculation that is very confusing.. it takes into account certain lender and title fee's, then for APR calculations, calls those fee's "Interest".. and then recalculates the note rate into an APR rate. The APR rate can be confusing because the lending rules are not the same for brokers vs. mortgage banks.. so you could be getting a better deal from a broker, but the APR might be higher... The simplest way to verify how good your deal is would be simple accounting.. money in, money out.. compare your loan options by adding your loan amount and cash out of pocket, and then look at the monthly payment.. I'm a preferred Lender with California and Arizona being my primary markets. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 NMLS# 226347 / LendUS, NMLS 1938/ AZMB0121893

Jun 3rd 2019
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