Mortgage Expert Eric Kandell discusses what you need to know before buying a home and how it can affect you and the bottom line.

1. What is APR
A guide to understanding Annual Percentage Rate.

2. Annual Percentage Rate (APR)
• Annual Rate charged for borrowing
money.
• Expressed as a single percentage.
• Represents the ACTUAL yearly costs
of the borrowed funds over the term
of the loan.
• Includes any fees or additional costs
associated

3. Note Rate vs. APR
• Note Rate or Interest Rate is the cost
of borrowing the PRINCIPAL loan
amount.
• APR is a BROADER measure of the
cost of your mortgage because it
reflects the interest rate as well as
other associated costs

4. Why have both?
• Shopping for loans can be tricky
• Which is better? 4.25% fixed rate
with no closing costs or a 4.0% fixed
rate with $7500 in closings costs?
• APR will help you “shop” for the
cheapest costing loan and compare
loans that may seem very similar

5. What is most important to you?
• If you want the LOWEST payment
than you should focus solely on
INTEREST RATE
• If you want the least expensive loan,
then you should focus solely on APR
• If you want a low payment and low
costs then you want to compare similar
rate loans and their associated APR

6. Why is time horizon more important
than APR?
• APR spreads your closing costs over
the term of the loan (30 yrs) but the
value of the APR is not optimal if you
are not going to be in your loan for 30
yrs
• Do you know anyone that made a full
30 yrs of mortgage payments? NO!

7. Lets Summarize
• APR has been moved to the very back
last page of the NEW Closing Disclosure
that replaced the Truth in Lending
• APR is not as important perhaps as it
was once thought due to how often we
refinance, sell, or move homes
• APR can be helpful in comparing
different competing loan offers
• Determine the most important thing to
you, the lowest payment or the lowest
cost?

8. Thank you.