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Home / Real Estate Information / Home Buyer Tips / MA Home Loan APR And What It Means

01.23.13 Home Buyer Tips, Mortgage Information

MA Home Loan APR And What It Means

When looking for home loans, you typically see information on interest rate and APR. These are commonly misinterpreted as being synonymous, but they actually have different calculations. It is important for home buyers to compare both. The following is an overview of MA home loan APR and what it means.

Interest Rate vs. APR

Interest rates apply to monthly mortgage payments for the length of a loan. This is usually the rate advertised by mortgage companies. It does not include the up-front cost of a loan. Fees can differ among loan programs and financing companies. For example, there can be pre-paid interest for one loan but not another. Other costs that may be included are loan origination and services fees.. The APR combines the interest rate plus certain closing costs, so it is a better indication of overall cost.

How APR Is Used

When assessing various financing options from the same or different lenders, the APR facilitates an easy comparison. You may be presented with one option with high fees and another with low fees and a separate interest rate corresponding to each. The real cost includes both what you pay up-front and what you pay over time. The APR may thus help you you select a loan.

Loan Amount Term Interest Rate Up-front Cost APR
100,000 30 years 5 percent 1,000 5.09 percent
100,000 30 years 4.5 percent 4,000 4.85 percent

APR Disclaimer

There are a few things that consumers must keep in mind about how APR is determined. It is formulated using the term of a mortgage. If you pay off your loan in a fewer number of years, the final APR will be more. Also, one mortgage that seems to offer a lower APR than another might end up having a higher APR if the time frame were changed. The lowest APR is not automatically the better option. Because most home owners do not keep the same loan for its entire length, this is an important thing to keep in mind.

Loan Amount Term Interest Rate Up-front Cost APR
100,000 5 years 5 percent 1,000 5.41 percent
100,000 5 years 4.5 percent 4,000 6.12 percent

Secondly, some APR estimates are not precise. For example, the interest rate on an adjustable rate mortgage will fluctuate but the amount is not predictable. The APR on these loans are estimated using the starting rate.

More Information on MA Home Loan APR And What It Means

To perform a good comparison of loan options, it is essential to ask for quotes within a similar time frame (on same day if possible) as rates change daily. Also remember that your final rate is not determined unless you lock in. Always review the interest rate and APR jointly to better assess cost. A knowledgable loan officer can furnish further guidance on MA home loan APR and what it means.  For further information contact Christopher Graves at Emery Federal Credit Union via phone at 781-759-1200 x22 or email christopher.d.graves@gmail.com.

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Tags: APR, home loans, interest rate, MA

Chris Graves's avatar

Chris Graves

I grew up in Massachusetts, spent the majority of my young adult life in Boston, and own a home in Windham NH. I have owned properties in MA and NH. I specialize in mortgage lending in Massachusetts and New Hampshire and my company does have the ability to lend in other states. I graduated from the University of Massachusetts in Amherst Massachusetts in 2002. I have a Bachelor’s in Science. In addition to managing a team of loan officers my personal loan production is always in the top of the entire of company. I have personally been in the mortgage business for over 13 years. I pride myself with taking my clients from application to close in the smoothest and quickest way possible, while keeping them well informed during the entire process. I originate my own loans from start to finish and work hand in hand with my loan processors & underwriters to make sure I am updated to the minute with all of my files. I stay up to date with lending guidelines and speak with underwriters on a daily basis to ensure I am aware of all of the lending guidelines in place.

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Topics

  • Local Information (61)
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  • Mortgage Information (118)
  • News (22)
  • Real Estate Information (176)
    • Featured Properties (2)
    • Home Buyer Tips (134)
    • Home Maintenance & Repair (12)
    • Home Seller Tips (40)
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Disclosure

Company NMLS 1788.
Licensed by the New Hampshire Banking Department #13092-MB.
Licensed in Massachusetts.
Licensed in Maine.
Licensed in Florida.
Lender and Broker License #MC-1788 (Not Licensed in Alaska or New York)
http://www.nmlsconsumeraccess.org
Click Here for Our Privacy Policy

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