| Obtaining the best home mortgage loan rate will save | | | | on the loan, you'll also have to pay closing costs and |
| you thousands of dollars in interest paid over the life of | | | | perhaps even points. Closing costs are not technically |
| your loan. Unfortunately, unless you're versed in | | | | interest, but to you the borrower they are, because it's |
| mortgages, it's easy to be mislead by lenders. You can | | | | money you have to pay to get the house you want. |
| think you're getting a great loan, but in actuality, you | | | | Points are specifically interest paid in advance. |
| can walk out of the closing with a loan that will cost | | | | So, now you not only have to check the stated |
| you thousands more than it should. | | | | interest rate on your loan, but the closing costs, and the |
| Let's talk about how to avoid this. | | | | points, too. This makes getting the best home |
| Just to take an example. If you got a 30-year | | | | mortgage loan rate more difficult that you might have |
| mortgage for a principal of $150,000 with an effective | | | | first imagined. |
| interest rate of 5.5%, your payments would be $851.68. | | | | Fortunately for all of us, there's a better way to |
| If you get a loan at 6%, your payments would be | | | | compare loans than just by their stated interest rate. |
| $899.33. That's a difference of $47.65 per month. | | | | It's called the annual percentage rate, or APR. APR is |
| That may not sound like a lot of money when you | | | | essentially calculated by taking into account all of the |
| compare this to a $150,000 house, but over time it will | | | | money you pay to acquire a certain loan. In other |
| add up. If you kept the house for just 5 years, you | | | | words, the points and even some of the closing costs |
| would be paying an extra $2859 in interest! | | | | are included in the APR calculation. |
| Now, you might be thinking that you can tell if your loan | | | | When you're shopping for your best home mortgage |
| has an interest rate of 5.5% or 6%, and you can if it's | | | | loan rate a better way to compare loans is by their |
| the stated interest rate. But there are several ways | | | | APR instead of their stated interest rate. How do you |
| lenders make money from the money they lend you. | | | | find out the APR? Lenders have to give you this |
| And getting your best home mortgage loan rate | | | | information by law. As a matter of fact, they have to |
| depends on your understanding this. | | | | advertise the APR of any loan they're advertising. |
| When you get a loan, besides the stated interest rate | | | | |