First time homebuyer Q - Int vs. APR

fadingathedges

What's a reasonable difference?

Our Fairway guy is quoting us 3.75 and 4.175, which seems like a bit of a jump. Very few comparisons are googlable.


TIA!

zepherin

If you are in the US the buyers realtor is customarily free.

The seller pays the 6% commission out of the settlement table to their agent, or to your agent and their agent. The amount is the exactly the same.

The interest rate is the cost of borrowing money and is generally fixed based on the loan principle. APR covers interest and other fees associated with a mortgage.

Cauld

Are there any points? APR is the answer to the question, "If all the fees came out of the interest, what rate would make everything even out?" It provides a common ground to compare different mortgages.

Agree that there's really no reason not to use a buyers agent in the US, unless you can use your lack of an agent as a significant bargaining chip.

fadingathedges

It was, and we're well past that. We did buy points from 3.85 to 3.75, and still are seeing 4.175 APR. Thus the question.

e~ Was phone, am now a real boy. Thank you both for your input.

I'm not asking the difference, definitionally, which we've Googled, I'm more asking if a .425 jump is reasonable. The examples I've seen and have available to compare are essentially showing things more like a .1 difference, or a .3 difference at most. We are set to close at the end of the month, and are just now solidifying the lender situation because of a title issue that had to be cleared up. It was a property law final exam all over again, but thank God it was open book, and we solved it.

We need to sort out in the next day whether we take this offer or find another lender as soon as possible to keep our dates.

Cauld

Points will lower your interest rate more than your APR, since you're basically prepaying some interest in return for a lower rate. This link seems to explain things decently.

Your variance seems high to me, but I'm just a guy on the internet. I'm not a mortgage professional or banker or anything. I also don't know anything about the specifics of your mortgage, or how many pts you're buying, etc.

Why not call around and get quotes, or just ask friends/family for mortgage broker recommendations and let them do it?

fadingathedges

The time crunch is the main concern. I've made a few calls to friends, and we got a few quotes initially, but the other competitor just isn't as responsive and I don't think I can rely on them to make the closing date work for us. I figured someone here might be able to spot if this was a clear bad deal, and the aforementioned title issue has us needing to decide this question essentially right away.

DevoutlyApathetic

Over how long a period is that APR calculated? Mortgage fees are very front loaded.

I think mine was only .1 over 5 years but then I went through a credit union and didn't need PMI. (I'm unsure if PMI would be rolled into the APR calculation or not.) Also that was 3 years ago.

Thundyrkatz

I echo DevoutlyApathetic's question.. what is the term of your loan?

I looked at this simple calculator for BankRate.com... Mortgage APR Calculator

If your around 15 to 20 years then the math is close. Though 4.175 still seems on the higher end. But you know more info, an on line calculator should give you some information.