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What additional factors does APR consider? Should I use APR as a basis for comparison of lender offers?

by INStein from Vienna, Virginia. Apr 3rd 2013 Reply


William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

APR is not a good way to compare.. The lending rules are very different when using a broker vs. a bank or mortgage bank.. When dealing with a broker, every penny that lender collects will be disclosed, and it has to show as part of your PFC's (pre paid finance charge) which directly effects your APR. A bank or mortgage bank is not required to disclose all the funds he's collecting for a loan, so his APR could be considerably lower than the broker, even though the quote could be exactly the same.. The absolute best way to compare mortgage offers is simple accounting.. Money in, money out.. And what the note rate is.. But APR's are very deceptive, and can be manipulated to the mortgage bankers benefit.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Apr 3rd 2013
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Ken Burrows (mortgagesforamerica)
#19 ranked lender in Nevada - 572 contributions

APR will be the same with almost every lender out there depending on the the closing costs, mortgage insurance, upfront costs, etc... However it should equal out as long as the fees are the same. If I can be of assistance please let me know. P: 888-320-7888 - Ken@MortgagesforAmerica.org

Apr 3rd 2013
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#77 ranked lender in Florida - 2,240 contributions

The APR's should all be in line, if one is much higher than another then you would not want to go with that one as more fees are probably being charged to you.

Apr 3rd 2013
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Jeanette Salamon (Jeanette)
#64 ranked lender in Virginia - 32 contributions

Good afternoon INStein......APR is the annual cost of credit over the life of a loan, including interest, service charges, points, loan fees, mortgage insurance, and other items. By comparing the offered APR rate from different lenders, you can determine how much a particular rate is going to cost you. For example.....if 2 lenders are both offering you a 3.50% rate, but one's APR is higher.......then the lower APR is the better deal. If you have a particular scenario you would like assistance with, feel free to contact me at jsalamon@weststarmortgage.com. Wish you the best of luck!

Apr 3rd 2013
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Joe Shamie (Joe Shamie)
#5 ranked lender in New Jersey - 1,412 contributions

No. Unfirtuantely, there are lenders out there that manipulate the APR. APR is simply a REQUIRED disclosure that the lender is required to provide the borrower. It has no impact on your monthly payment. You should get the lowest rate with the lowest fees. Plain and simple. The APR will confuse you more than it will help you.

Apr 3rd 2013
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Charlie Sparks (CharlieSparks)
#1 ranked lender in New Mexico - 399 contributions

APR is a reasonable way to compare lenders but if one lender under-estimates fees and another over-estimates them the the APR will be skewed. Besides looking at APR you should also compare the actual costs that go into it. Items like title insurance, recording fees, appraisals, etc. should be very close regardless of the lender. If one is significantly lower I would question it.

Apr 3rd 2013
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Dave Metsker (DaveMetsker)
#37 ranked lender in Oregon - 2,317 contributions

APR is a good guide to use, for the overall cost of the loan.

Apr 3rd 2013
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Andrew Alfonso (CashCow)
#43 ranked lender in Florida - 271 contributions

Forget APR. You would be doing yourself a favor. Concentrate on the NOTE RATE.

Apr 3rd 2013
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Peter Savino (855411LEND)
#101 ranked lender in New Jersey - 332 contributions

The diffrence between rate and apr is cost , when comparing lenders start with rate then go the apr. and compare monthly payment too.

Apr 3rd 2013
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James Mazzola (Mazzola)
#110 ranked lender in New Jersey - 313 contributions

Very simple: The APR is the actual cost of you mortgage in the form of Interest Rates: It is the Interest Rate + the closing cost factored by the term of the loan. if you have any questions, please contact me: (JIM) cornoil@comcast.net

Apr 3rd 2013
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Carlo Sanchez (MortgageLendingPro)
#0 ranked lender in Utah - 1,163 contributions

William hit it on the head in the first response. Look at what the rate and fees are to make a comparison

Apr 3rd 2013
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

APR takes all costs associated with the loan into account, not just the note rate.

Apr 3rd 2013
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Carlos Figueira (carlosfigueira)
#1 ranked lender in New Jersey - 199 contributions

DON'T "Forget APR" as some prior replies......APR will disclose to you that you are paying fee's thru your loan. GFE will itemize the fees when you do your shopping

Apr 3rd 2013
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Jericho Cherry (Jerichocherry)
#56 ranked lender in Virginia - 1,107 contributions

APR should not be a factor for comparing different lenders. William sumed it up very well. I am a Branch Manager here in Virginia and would love to help you with any additional questions or needs. Please call me. Jericho Cherry - 804-556-0685, or email me at jcherry@loansimple.com

Apr 3rd 2013
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