Profile picture for user3866809

Apr vs. interest rate?

My lender gave me some numbers and I'm trying to understand them. He gave me an apr of 4.972 and interest rate of 4.875. What does this mean? And these are with 20% down in Kenosha, wi. This was from today, is this a good rate? Thanks so much, my head is spinning.
  • August 20 2013 - Kenosha
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Answers (10)

Profile picture for sunnyview
Although this question is a year old, you can find good discussions about APR vs APY. APY is the one to look at since APR is often used as a lost leader number of sorts that leaves out many costs, points etc.
  • August 07
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Be careful when comparing APR from one company to another as the APR only considers costs from the lender and not title and escrow costs.  If you are refinancing or purchasing, the title and escrow costs will likely vary to make sure you consider all the costs. 
  • August 07
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Long story short. APR is there to alert you to the loan costs. If a rich uncle loaned you the mortgage amount. There'd be no such thing as the APR. Now if you get more than one loan quite there will be normally a slight difference in there APEs . The lower Apr means they are simply charging you lower loan costs.  Perhaps a cheaper escrow amount, appraiser, bank fee etc. Hope this helps.   
  • August 23 2013
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Feel free to email/fax me the GFE and I'll let you know if you're getting a good deal or not. I'm in Brookfield, WI.
  • August 23 2013
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Profile picture for Brent Tye
When the APR and Rate are almost the same, say less then 0.150 difference, then you can assume your closing costs are in line.  Without knowing your credit score, I cannot tell if 4.875% is a great rate today. In today's market, 20% down does not always give you the ' best rate in the paper", your credit score is taken into account.
  • August 23 2013
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Profile picture for Trish1974
I have the exact same question.  Which rate is used to calculate the monthly payment?  I feel your confusion user3866809!
  • August 23 2013
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Great question and based on the APR I would guess you have low closing costs.  However if your loan size was huge your closing costs could be very high.  If you have a very small loan size you have almost no closing costs.

Rates have been going up and down the last two days and just improved so if you have not locked already you may want to check again.

Because we do not know your credit score (maybe other factors) we cannot really tell you if you are getting a good rate or not.

  • August 23 2013
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I would say that APR is pretty close to average given the note rate...That being said, if you have good credit, etc, you could probably do a bit better than that today.
  • August 22 2013
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Profile picture for shapiroamg
That means you have a 4.875% interest rate and are paying some closing costs. The best way to look at this is to add up all the costs.
  • August 21 2013
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Profile picture for user4059648
It's hard to identify whether or not it's 'good'. Do you have a good/great credit? The APR basically includes all the fees and that sounds about average. The rate sounds just OK, especially with the market opening strong today
  • August 21 2013
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