Todays Tidbit: Truth in Lending- Is that really my rate? You will notice the “Note” rate for which you applied is not what is listed on the Annual Percentage Rate (APR) Truth in Lending (TIL)page. The APR is the cost of the loan in percentage terms taking into account various loan charges of which interest is only one such charge. Other charges which are used in calculation of the APR are Private Mortgage Insurance or FHA Mortgage Insurance Premium (when applicable) and Prepaid Finance Charges (loan discount origination fees, prepaid interest, and other credit costs). The APR is calculated by spreading these charges over the life of the loan which results in a higher rate than the interest rate shown on your Note. If interest was the only Finance Charge, then the interest rate and the APR would be the same. (this info was taken from Ellie Mae, Inc)
Posted on: Tue, 05 Nov 2013 22:34:55 +0000