Learn More About APR

    If you are considering investing in Gulfport MS real estate, it will be necessary to understand the term APR or Annual Percentage Rate. The federal Truth in Lending law requires that lenders disclose their rates when advertising. By understanding the APR, one is able to compare rates at different lenders, and in doing so, finding the best offer.
    What is the APR?

    The interest and cost of the loan is the reasoning behind the APR, which represents the number of payments times in the year multiplied by the periodic rate of interest; together they form the annual rate. 

    In comparing loan products, it is important to compare similar loans. For example, a 30-year term must be compared with another 30-year term APR to find the mortgage payment at two different lenders. Otherwise, it would be like comparing apples to oranges. 

    APR Differences

    The total cost of the loan, with the mortgage insurance premiums and origination fee included, is part of the APR. However, not included are late payment charges, document fees, appraisal fees, title fees and application fees. Often it is confusing, as different lenders calculate the rate differently, yet have the same APR. Rounding up the numbers to the nearest one-eight of a point as well as adding in other costs may account for the differences in the way the rate is calculated.

    On the other hand, variable loans, tied to the market index, cannot be compared between lenders, especially if rates are locked in for a period, include balloon payments or pre-payment penalties are involved.

    Although the APR is not perfect, it is one of the tools to utilize in investing in great Gulfport MS real estate. You will be more prepared to compare lenders and loans as well as understand what your monthly mortgage costs might be.


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