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Eileen M. Day REALTOR
WHAT’S THE TRUE RATE?
When you compare mortgage interest rates offered by different banks, there’s going to be a confusion factor. Inevitably, you’ll have to compare the quoted interest rate and then try to figure the impact of the points added to the price. Normally, the lower the rate, the higher the points. So which is the better rate, 12% and one point or 11 % and two points?
The easiest way to get the answer to this important question is to ask the lender what the Annual Percentage Rate (APR) is. By law, the lender must make this disclosure to you. In effect HE will add the quoted rate and the dollar rate of the points, then make some divine mathematical calculation and come up with a true rate. This is one which you can compare from bank to bank.
Points are simply charges assessed by a lender for arranging the loan. In other words, they are a form of interest collected in advance. One point is the equivalent of one percent of the mortgage amount you are borrowing.
If there is anything we can do to help you in the field of real estate please stop in at EILEEN M. DAY, Realtor, The Clopton House, Washington, Va. 22747. Phone 675-3033. We’re here to help.
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