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Mortgage Interest Rate vs APR

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  • Avatar WorkforFIRE 
    Participant
    Status: Physician
    Posts: 46
    Joined: 11/22/2018

    Can someone tell me if I am understanding this correcting?
    I keep seeing on lender websites “interest rate” and “APR” and the APR is always higher.
    My understanding is the APR includes the cost of any points and closing cost. And the Interest Rate is what my interest rate will be on my loan and this is what my monthly payment is based off of.

    Any input would be appreciated.

    Thank!

    #227343 Reply
    ACN ACN 
    Moderator
    Status: Physician
    Posts: 628
    Joined: 01/08/2016

    https://www.bankrate.com/finance/mortgages/apr-and-interest-rate.aspx

    If you're ever having a bad day, just remember in 1976 Ronald Wayne sold his 10% stake in Apple for $2,300.

    #227346 Reply
    Avatar WorkforFIRE 
    Participant
    Status: Physician
    Posts: 46
    Joined: 11/22/2018

    Thanks.
    So are we trying to get the lowest “Interest Rate” or “APR”?

    For example, 10/1ARMS – Interest rates at 3.0 but the apr is 3.65. But a 30 year fix has Interest rate of 3.5 and APR at 3.60.

    Apologies if this is such a basic question. Appreciate y’alls help.

    Thanks!

    #227350 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2806
    Joined: 01/03/2017
    So are we trying to get the lowest “Interest Rate” or “APR”?

    Click to expand…

    Both.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #227355 Reply
    Liked by ENT Doc
    ENT Doc ENT Doc 
    Participant
    Status: Physician
    Posts: 3500
    Joined: 01/14/2017

    Yeah you’re negotiating on two fronts – you want a low interest rate AND low closing costs. Some closing costs can’t be changed, for example if you must pay for title insurance. Others are negotiable. Some lenders will negotiate on the closing costs, giving you discounts or credits. And you can also negotiate the rate. The rate will have more impact over time – try to play them off one another to get the lowest rate possible. Don’t be afraid to walk away if you’re not getting a good rate. Many come crawling back.

    #227389 Reply
    Liked by Lordosis

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