When you are shopping for an Atlanta new home loan, you are often quoted an annual percentage rate (APR) in addition to the interest rate. If you are like most consumers, you probably wonder what the difference between the APR and the interest rate is, and how they affect you.

The APR is not the interest rate that your mortgage is based upon. Instead, it is a percentage that attempts to estimate the total cost of the credit that you’re borrowing, and is designed to help borrowers compare different loan options. It takes your interest rate, and then adds in certain aspects or costs of the loan you choose, such as closing costs or finance charges. This allows you to compare loans with different rates, fees or terms. The APR will also allow you to understand the tradeoffs between interest rate and the fees paid at closing, such as whether or not you should pay higher fees to lower your interest rate or increase your interest rate to cover closing costs.

On the other hand, the annual interest rate determines what you are paying back on a monthly basis based on your principle balance.

So, which number should you pay the most attention to? The annual interest rate. The APR is intended to be used as a guide to give you an estimated total cost of the credit you are borrowing; you shouldn’t ignore it, but it is not as important as the annual interest rate, which will affect your monthly payment.

If you have more questions about interest rates or APR’s, call an Academy Mortgage loan officer at 404-558-4399 or visit www.AcademyMortgage.com.

Academy Mortgage

Equal Housing Lender. (c)2013 Academy Mortgage License #3113. GA Lic. # 20505. This is not a commitment to lend. Academy Mortgage Atlanta: 5565 Glenridge Connector, Suite 400. Atlanta, GA 30342. Georgia Residential Mortgage Licensee.

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