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Too high of an interest rate and APR??

I've been given a a quote from a lender that seems too high to me.  I have a 760 credit score.  The loan is an FHA due to gift funds.  The quote is 4.250% interest rate with a 5.3664% APR.
  • August 27 2013 - US
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Answers (9)

Best Answer

If you are concerned about apr being so far from note rate this is typical on FHA loan as the APR is including minimum 11 years and possibly 30 years of mortgage insurance payments. Your spread is standard and the 4.25 is reasonable depending on the adjusted origination expense.
  • August 27 2013
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User fb89842279, are you using a 3.5% or 5% down payment? If so, your APR will be higher than the 5.3664 figure.   
  • September 12 2013
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the spread on rate and APR is a lot greater than a loan without mortgage insurance and esp with FHA loans because the MI is much higher than it is on conforming loans.
  • September 12 2013
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If you are ever in doubt, check out other lenders. When you are thinking about buying a car I am sure you check out more than one dealership to compare products and prices. You should consider doing the same with lenders. Don't be afraid to check out other lenders to see what they can do for you. Sometimes lenders can beat the rates of other lenders or have more suitable niche products that can better for your situation. In other words, to be afraid to shop around!

Well I hope this helps! If you have any further question or if you would like a loan, feel free to contact me. Also, if you found this comment helpful, [Self promotion removed by Zillow moderator, please see our Good Neighbor Policy]!

Good Luck!
  • August 28 2013
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A new 30 year Fixed FHA loan at 4.25% with 3.5% down payment would have an APR of 5.735% based on mortgage insurance only, then will go higher after Origination Fees, etc are added.        
  • August 28 2013
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Justin is correct on this one-the spread is just about right and not too fee heavy at all-the APR spread from the actual interest rate is generally about 1%-the interest rate is good as well (in my humble opinion). Good luck! Sounds like your lender is treating you right to me.
  • August 28 2013
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Profile picture for daveskow
tip - on same day try asking the lenders you are considering to provide  quotes for  same loan amount / purchase price /  and rate  

by narrowing down variables - you can then compare the fees they both charge and  make a better  decision as yo whom to proceed with 
  • August 27 2013
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That's good to know.  Lenders keep telling me to compare with APR and the interest rate.  I don't know who to trust.  This is all new to me.  I wish there was an independent service that could compare the quotes I have.  Thanks!
  • August 27 2013
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Profile picture for daveskow
if you dont like the quote ....move  on to another lender and get another  few quotes

compare the actual note rate and the actual closing costs and loan fee ....dont  use APR to compare options
  • August 27 2013
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