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# Interest rate vs apr?

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20th Dec 2009 by Burt Carlson

The interest rate in a mortgage is the true rate (the rate at which your payment is calculated) while APR (Annual Percentage Rate) is the government's calculation of your total cost of credit. Simply put the APR is a mathematical calculation that takes into account some but not all of the loan costs. If there were no costs in your loan then the rate and APR will be identical. Since that is almost never the case there always is an APR. Further, APR is a disclosure item required by law but does not impact the payment. You can use the APR to compare loans but it is always better to go to the origin of APR which are the costs of the loan. This can be done gy getting a Good Faith Estimate (GFE) from any lenders you are working with. In the end the best thing to do when comparing loans is compare the rate, APR and estimated costs.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com
11th Dec 2009 by JonB

The difference between APR and interest rate is that the APR takes into account all the closing costs and fees associated with the loan, so it more accurately describes the true cost of the loan every year, the interest rate does not take anything into account as is just the cost of the loan every year.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com

10th Dec 2009 In Finance 2 Answers | 1593 Views
Subjects: apr, interest rate,

Interest rate vs apr?

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