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- Mortgage
amount
The amount of money you will borrow.
- Interest
rate
A percent charged by the mortgage company on the money you will
borrow, usually charged annually.
- Term
in years
How long you have to repay your mortgage amount. The most common
mortgage terms are 15, 20, and 30 years or 180, 240, and 360 months.
- Monthly
payment
This is a combination of the mortgage amount and interest rate
divided in equal monthly payments over the term of your loan.
- Annual
Percentage Rate
The Annual Percentage Rate (A.P.R.) is the cost of your credit
shown as an annual rate. Because you may be paying loan discount
"points" and other "prepaid" finance charges
at closing, the A.P.R. disclosed is often
higher than the interest rate on your loan.
- Why
is the Annual Percentage Rate different from the Interest rate
for which I applied?
The A.P.R. is computed from the amount financed and is based on
what your payments will be on the actual loan amount. Example:
In a $100,000 loan with $3,000 Prepaid Finance Charges, a 30-year
term, and a fixed interest rate of 11%, the payments would be
$952.32(principal and
interest). Since the A.P.R. is based on the Amount Financed ($97,000)
and the payment is based on the actual loan amount given ($100,000),
the A.P.R. (11.765%) is higher than the interest rate.
- Pre-Payment
Penalty
A penalty charged by the mortgage company for paying your loan
off earlier than the specified period. Usually the prepayment
term can be from 1-5 years. During which time the penalties apply
for early payoff.
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