Financing in 01590>Question Details

Moodgirl, Other/Just Looking in 01590

If i pay cash for all the closing costs, should the APR and the interest rate be equal?

Asked by Moodgirl, 01590 Wed Nov 3, 2010

My final HUD statement shows all the costs, including closing, in the Debit column. In the Credit column it shows the payoff amount of the first mortgage. If i'm paying the difference, should be APR = interest rate?

Debit = $203,000 (inclusive of closing costs)
Credit = $201,000
Difference of $2000 is being paid by me in CASH.
My interest rate is 3.75%, but my APR is being shown as ~ 3.825%. Is this correct?

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If you pay cash for a bottle of milk does it mean you didn'y pay for the bottle of milk?

The APR has no bearing on your mortgage or monthly mortgage payment. It is a tool to compare the cost of one loan to the cost of another. You paying cash for your closing costs do not eliminate those from being a cost to close your loan.
1 vote Thank Flag Link Wed Nov 3, 2010
Easiest way to answer would be the APR is the total cost of your loan including closing costs. So it's your interest rate of 3.75% plus your 2,000 of closing costs. Hope this clears things up. Congratulations on your new purchase!
0 votes Thank Flag Link Mon Nov 8, 2010
cash doesn't make a difference in any way.
0 votes Thank Flag Link Mon Nov 8, 2010
thanks for the quick responses! i did ask my lender but they haven't gotten back to me yet.
0 votes Thank Flag Link Wed Nov 3, 2010
They will not be the same and the cash for closing costs doesn't make a differnce. The difference is based on how often interest is calculated over time.

Please let me know if that makes sense and good luck with your purchaseA

Amy Mullen, Realtor CPA LMC
http://www.amymullenrealestate.com
0 votes Thank Flag Link Wed Nov 3, 2010
You should have your attorney or mortgage professional explain the differences in these rates & why they are applied the ways they are. That way you'll have the exact explanation from the source.
Web Reference: http://www.Medfordhouse.com
0 votes Thank Flag Link Wed Nov 3, 2010
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