Financing in 11211>Question Details

Toastedbread, Home Buyer in Williamsburg, Brooklyn...

is comparing APR a good way to determine which mortgage to go with ?

Asked by Toastedbread, Williamsburg, Brooklyn, NY Wed Sep 8, 2010

say i'm eligible for fha loans, putting 10% down for downpayment and flexible with closing costs

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Not necessarily. A loan has many components to it. APR only tells you the affective rate after accounting for all fees and points associated with a loan. It doesn't tell you how they break down. You can have two loans with different rates, MI amounts, and fee structures and they could have the same APR. It is best to compare GFEs or Good Faith Estimates as that gives you the full make up of the loan. This will enable you to better compare apples to apples. If done in conjunction with a good lender and/or real estate professional you could get something really great depending on your needs, goals, tax deduction requirements, etc. If you would like some recommendations, just let me know and I'll provide you with a list of the best I know.
1 vote Thank Flag Link Wed Sep 8, 2010
APR is a good way to determine which mortgage to go with but you need more information to make a decision as to what is best for you.
0 votes Thank Flag Link Thu Sep 9, 2010
thanks to all..very good feedback!
0 votes Thank Flag Link Thu Sep 9, 2010
Dear Toastedbread:

APR is a good way to determine which mortgage to go with but you need more information to make a decision as to what is best for you. This is due to the fact that it is a matter of personal preferance. You need to separate and compare the actual interest rate you will be given and the closing costs you will incur from the onset.

Often times buyers will opt to pay more closing costs up front if it gets them a better rate because this will save them money in the long haul. Some banks even will lower the interest rate if you are willing to pay points (a point is 1% of the loan amount) up front. This can be attractive to purchaser who plan on owning the property for a long, long period of time.

If the purchaser has little money saved they may prefer to have lower closing costs from the get go and even though it would cost more in the long run they do not mind. This is also true if the purchaser is planning on not staying long term.

The APR is a quick reference vehicle, but it would greatly benefit you to have all the details so you can compare and determine what is best for you. Good luck!

Sincerely,
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
Email: MitchellSFeldman@aol.com
0 votes Thank Flag Link Thu Sep 9, 2010
I never found APR to be particularly useful when comparing a loan.
The only fees that vary from bank to bank, from mortgage broker to mortgage broker are lender/origination fees and the rate. All the title fees and taxes and such are going to be the same given that you go with the same title company.

So you're better off comparing these fees ( lender fee, admin fee, credit report fee, origination fee, processing fee) and the rate.
0 votes Thank Flag Link Thu Sep 9, 2010
thanks. but I thought APR takes into account fees, points and costs already ?
0 votes Thank Flag Link Wed Sep 8, 2010
Toastbread,

In a short, not so boring answer: When comparing mortgages it is important to compare APR's so thats a great start. This number is going to have a big impact on your monthly budget. However it is also important to look at the individual fees that each bank is charging you: ie: points, origination and application fees and so on. There are a lot of fees that come along with a mortgage and cannot be avoided but it is important to compare one banks fees with the other , I promise there will be some differences. If you have any other questions you can contact me directly via email valentinorealty@gmail.com
0 votes Thank Flag Link Wed Sep 8, 2010
Hi toastedbread
well yes that is the start but depending on your actual credit approval and the property approval each bank's
underwriting department has different criteria. so you should start with the lowest rate you can find with a bank and go for it. Have you found a property yet? if you need any help please contact me directly
madelinepadovano@fillmore.com
7183328800
0 votes Thank Flag Link Wed Sep 8, 2010
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