When purchasing a new home, there are a number of expenses that you can face – particularly when it comes to obtaining (and eventually paying off) a mortgage. Some of these costs can include the interest rate, a long list of different application and processing fees, and loan origination points (if applicable).
While most borrowers understand what loan interest means, an area where it can get a bit murky is with a figure that is referred to as the APR, or the Annual Percentage Rate. In this case, whereas the interest rate is the cost you will pay each year to borrow the money from the lender, this rate does not reflect any of the other charges and / or fees that you may incur. It is your loan’s interest rate, though, that is factored into what your monthly mortgage payment will be.
Conversely, the Annual Percentage Rate (APR) is the total cost of borrowing money on an annual basis. So, with the Annual Percentage Rate, the interest rate on your mortgage, plus other charges and fees, are included.
For this reason, the Annual Percentage Rate reflects a number that is typically higher than the interest rate charged. This, then, can actually represent a broader measure of the cost of your mortgage.
If you’re considering making a move soon, we can help. By listening intently to what it is you’re looking for, we will help you to narrow down the ideal next home – in the price range that also fits your budget.
So, when you’re ready to check out the possibilities, in Bakersfield and the surrounding locale, just give us a call for more information, as well as for your free, no-obligation home value analysis of your current residence.