If you’re shopping for a mortgage refinance and are using the Annual Percentage Rate to compare mortgage offers you’re not getting an apples-to-apples comparison of what’s out there. While providing an Annual Percentage Rate APR is required by Truth-in-Lending laws, there is no standard for how lenders calculate this figure. If you’re searching for the best refinance rates for your next home loan you’ll want to know the best way for mortgage rate shopping while avoiding junk fees. Here’s an article by Dan Green at The MortgageReports.com that explains why your lender’s APR is flawed:
More commonly called APR, Annual Percentage Rate is a government-made math formula. It aims to measure the total cost of borrowing over the life of a loan. APR is equal to (your loan size) + (your loan costs) + (your interest charges over time). APR is not the metric for comparing mortgages — it’s a metric. And, sometimes, the best way is the easiest way. Look at rates and look at fees. Beyond that, the rest can be smoke-and-mirrors.
Getting the lowest refinance rates in today‘s market isn’t hard if you qualify; however, the trick is paying less for loan origination fee and closing costs. One of the most common mortgage mistakes is not comparison shopping or negotiating fees when mortgage refinancing. The fees you pay at closing vary widely and are completely negotiable from one lender to the next.
You can learn more about paying less for your home loan when mortgage refinancing by checking out my free Underground Mortgage Videos.