Author Topic: What's better rate or apr when comparing lenders?  (Read 1613 times)

mamabear18

  • 5 O'Clock Shadow
  • *
  • Posts: 23
What's better rate or apr when comparing lenders?
« on: January 17, 2020, 02:31:40 PM »
Thank you in advance for your help!
What's better rate or apr when comparing lenders?

dandarc

  • Magnum Stache
  • ******
  • Posts: 3821
  • Age: 37
Re: What's better rate or apr when comparing lenders?
« Reply #1 on: January 17, 2020, 02:36:40 PM »
If you're not going to delve into the details, go with APR. Is a more "all-in" comparison.

Almost any lender will lower the rate if you pay points up front, for example. APR takes points into account whereas the simple rate on the note does not reflect that.

August26th

  • 5 O'Clock Shadow
  • *
  • Posts: 89
  • Location: Beautiful Colorado
Re: What's better rate or apr when comparing lenders?
« Reply #2 on: January 23, 2020, 12:33:03 PM »
The smaller the spread between interest rate and APR, the less fees there are.

But if you choose a lower rate and want to pay points for that rate, then the APR will certainly be higher.

Biggest comparison is:

-interest rate
-lender fees (underwriting, processing, commitment..... different lenders word this in various ways)
-discount points being charged to get a certain rate (if any)

And then just look at the total cash to close. Some things are super negligible, such as how many months of escrow reserves they are collecting. That kind of stuff comes out in the wash and aren’t really “competitive” items.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 12000
  • Age: 62
  • Location: NorCal
Re: What's better rate or apr when comparing lenders?
« Reply #3 on: January 26, 2020, 12:37:24 PM »
The crucial othing is for you to know the difference between the two. Once you do, the answer is easy. I could just tell you but it's better to learn to fish. Get to googling, then come back and tell us what the answer is.(Hint: it's pretty easy.)

mamabear18

  • 5 O'Clock Shadow
  • *
  • Posts: 23
Re: What's better rate or apr when comparing lenders?
« Reply #4 on: February 03, 2020, 10:54:42 AM »
Dicey - Is the answer interest rate????

I was asking b/c I think I know the answer, but wanted to confirm with you smarter people. lol

Dicey

  • Senior Mustachian
  • ********
  • Posts: 12000
  • Age: 62
  • Location: NorCal
Re: What's better rate or apr when comparing lenders?
« Reply #5 on: February 03, 2020, 11:48:44 AM »
Dicey - Is the answer interest rate????

I was asking b/c I think I know the answer, but wanted to confirm with you smarter people. lol
I'm trying to teach you how to fish here. The terms are simple. Look it up. Seriously. It will take two minutes, max.

le-weekend

  • 5 O'Clock Shadow
  • *
  • Posts: 75
Re: What's better rate or apr when comparing lenders?
« Reply #6 on: February 13, 2020, 01:18:30 PM »
Just today I was inspecting an offer letter from a mortgage broker and I had to google this very thing.

I'm thinking APR is the more "realistic" number because a broker could say you're getting a great "interest rate", but then tack on a bunch of fees and other confusing things which would make the APR be a higher number. Is that right?