What's the difference between the Interest rate on my mortgage and the APR???

Here's a great article from my favorite lender team: The Perpich Group of Republic Mortgage in Folsom.  Erick and Lupe and the best lenders in the business and take great care of all my buyer clients.  Erick can be reached at 916-549-3577.

APR vs Interest Rate

There are many terms, concepts and general language that might seem complex in the mortgage industry, but APR–or annual percentage rate–and interest rate seem to combine to create one of the the two most confounding terms in the industry.

On it’s own, interest rate seems nearly self-explanatory and the definition makes sense to most prospective homeowners. APR, however, often requires more explanation.

Interest Rate

Interest rate refers to the rate at which a borrower pays back interest on a loan that they take from a bank or other lender. Broken down, the interest rate is the percentage of the principal loan amount the borrower pays back during a certain period of time, and a year is the most common time frame to use as a metric. The lender predetermines the interest rate and the time frame for repayment of principal and interest.

Annual Percentage Rate (APR)

The most basic explanation of APR that it bundles all the fees associated with your loan together with your actual interest rate, and “annualizes” that into one all-inclusive rate. In other words, the APR is a finance charge formulated as an annual rate of interest on repayment of loan. As if things weren’t confusing enough between interest and APR, the APR also adds in the nominal APR, which is the simple interest rate over the course of a year while the effective APR includes any fees agreed upon plus the compound interest rate over a year.

Quite simply, the APR gives a more comprehensive perspective of what the loan costs the borrower over the life of the loan.

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Doug Reynolds

Realtor

916-494-8441

         

www.SellWithDoug.com

www.BHGshortsales.com 

www.CollegeGlenRealEstate.com

Getting a little easier to qualify and buy a home....

Lenders are slowing making it easier for buyers to qualify and purchase a home. The lending industry is starting to feel more comfortable with the health of the real estate market as a whole and that means good news for buyers looking to qualify.  I work with an excellent lending team: Erick Perpich with Republic Mortgage(916-549-3577) in Folsom has an excellent team that does a great job a qualifying buyers for low down payment loan options.  Most buyers right now that don't have a large amount of savings are going with 3.5 to 5% down payment options that his company provides.

Mortgage Lenders Ease Rules for Home Buyers in Hunt for Business

Source: Wall Street Journal

As a sign of mortgage lenders’ rising confidence in the housing market, restrictive lending standards are beginning to ease, and the credit freeze is starting to thaw. Lenders have started to accept lower credit scores and to reduce down-payment requirements.

Making sense of the story

·         Lenders recognize that refinancing old mortgages will no longer be a huge profit center for banks, so competing for borrowers will be needed for business and future profits. As a result, lenders will have to open up to borrowers who may not have perfect credit or large down payments.

·         For example, the lender TD Bank began accepting down payments as low as 3 percent through an initiative called "Right Step" for first-time buyers. A year ago, the program required at least a 5 percent down payment.

·         Mortgage originations are expected to reach $1.1 trillion this year, which is down from $1.8 trillion last year and $2 trillion in 2012 due to less refinancing.

·         While private lenders have shied away from low-down-payment mortgages in the past few years, in the past year, more than one in six loans made outside of the FHA included down payments of less than 10 percent.

·         Credit scores for borrowers seeking conventional mortgages also are easing, as scores on purchase mortgages stood at 755 in March, down from 761 a year earlier.

·         Smaller lenders are trying to appeal to first-time buyers while many larger lenders are gradually reducing down payments for jumbo loans in order to attract wealthy customers.

aConnect with Doug Reynolds Real Estate via Facebook, YouTube, and Follow his Blog.

clear skies,

Doug Reynolds

Realtor

916-494-8441

         

www.SellWithDoug.com

www.BHGshortsales.com 

www.CollegeGlenRealEstate.com

How much money do I need for a down payment to buy a home in the Sacramento Area?

Doug Reynolds, a Sacramento Area Realtor, discusses the topic with a local loan officer. Erick Perpich, loan officer with Republic Mortgage, talks about the different options of VA 0% down payment, FHA 3.5% down payment and Conventional 5% down payment. You do not need to have 20% down payment to buy a home. It simply is not true and sometimes a poor decision for the buyer as well. Give Erick a call or email today if you are looking to see how much of a home you could purchase and exactly how much down payment and closing costs you would have. (http://www.republicmortgage.com/eperpich)

clear skies,

Doug Reynolds

 

www.BHGshortsales.com