One of the most confusing things about home mortgage loans is calculating the interest rate. It may seem hard to compare one loan which may have terms such as compounding interest, rates, terms, and other conditions with another loan. Comparing a 30 year fixed rate mortgage at 7% interest with one point to a 15 year flat rate mortgage at 6.75% with 1.5 points can look difficult. Besides just interest payments depending on your financial situation there may be other costs or ways to save. Add the confusing mortgage rates with any closing fees or costs associated with home mortgage refinance and it looks even harder to be able to calculate a true payment. Luckily for you there is the Federal Truth in Lending Act which requires all mortgage lenders to clearly give you the percentage rate as well as the total amount of the financing in dollars.
Getting the APR (Annual percentage rate) of a loan is a great way to truly compare the actual costs of different loans. An APR is figured out by taking the average finance charge which typically includes any fees or other loan costs and dividing it by the amount borrowed. It is shown as a number which is the annual percentage rate. Often an APR is a little higher than the mortgage rate because it includes all costs or expenses related to refinancing a home mortgage. Be sure to compare the APR when looking at other potential offers from mortgage lenders. Also be sure to know what fees are included in the quote and how much if anything the remainder of the fees will cost. Most of the time the APR quote will include all costs that are associated with a home mortgage refinance. A lot of homeowners can save thousands of dollars by simply refinancing their home. Mortgage rates are at record lows across many parts of the country. As homeowners look to take advantage of these low rates refinancing applications have gone through the roof. Be sure to exercise patience when refinancing and ask questions even if you think they may sound dumb. Do not be afraid to walk out on a lender and never sign anything you do not fully understand. Compare refinance quotes from a variety of lenders for the best deal possible.

-M Petrone

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