If we pay the closing costs upward will the APR be the same as the initial interest rate?
Answers | 3
I would avoid adjustable rate mortgages all together. If you have a fixed rate it will not change. You can "pay down" the rate upfront though. If you want to pay down your rate however, make sure it's worth the money, For example, if it costs you $2,000 to buy down the rate .250% and save you $35 a month, it will take you almost 5 years to make that money back. So make sure if you buy down your rate, it makes sense.
I presume you mean "upfront" on paying the closing costs, as opposed to adding them to your loan. The answer to that question is no. APR is determined by the costs of certain closing costs and prepaid loan expenses, and the means it's paid (rolling into loan, paying out of pocket, or getting a lender credit to offset the costs as I often do) doesn't impact the APR. It's somewhat deceptive in that aspect, and also on smaller loans, since the costs impact the APR far more on small loans than large ones.
APR is the costs such as points, appraisal, processing and underwriting... into the actual rate and divided by 12. Paying them doesn't make the APR lower. For the APR to match the rate the seller would have to pay All the closing costs that are added in OR you could choose a higher rate with a rebate that covers the costs APR is a way to show consumers a level playing field as each lender may have different fee structures