APR vs Interest rates
I want to take a second today to talk to you about the APR vs. interest rate. I get this question a lot and it’s one of those really hard questions to explain on what the differences are. An interest rate is actually your interest rate for the full duration of your loan, your APR takes the cost of what you are initially getting your loan for and adds that on top of your interest rate in a 1-year period. When we do VA loans typically all of your costs set. The appraisal is set by the VA, your title company’s picked by a third-party, those fees are in there and then the lender in some cases will have underwriting fee when they go through the financing. Those are three main factors or fees that are set in the cost so you could pay something called points and you could buy your interest rate lower and then you’re paying that additional fees on top of it. But APR is important do not get me wrong but it’s really physically what your interest rate is and what that gap margin is between your interest rate and your APR and making sure those gaps are not too overwhelming. One other big thing that affects a lot of veterans, we go through and do this, is their funding fee. So your first time funding fee, the first time you go through and buy a house if you don’t have a service-connected disability is two point one five percent. Well, that fee is going to be added on top of it broke it out and sometimes can make that APR much much higher, but it’s derived on something that is financing at the end of the loan. so like I said APR is mainly driven around fees everything else that goes through the process. please please please reach out to me, if you need a further explanation of this and it is to your benefit to understand exactly how this works and to make sure you understand exactly how it works. That knowledge is a shopping tool to understand what you’re getting and making sure it’s of value.
So thank you hopefully that helped a little bit but please definitely like I said if you don’t understand this, reach out to me or anyone on my team.