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Rates are flat today. Today’s rates with no lender fees are 3.5% APR on a 30 year, 2.875% APR on a 15 year and 2.75% APR on a 10 year. (click here for details)

So after a long weekend of rate shopping online, I am sure you noticed something different from lender to lender. Besides the interest rate, did you notice the dramatic difference in APR? If you did your homework, you should have.
Check it out in today’s video:

The APR or Annual Percentage Rate is a single percentage number that represents the actual yearly cost of funds over the term of the loan. The APR will include any fees or additional costs associated with the mortgage transaction.
So you have the interest rate and then you have all the lender fees that are associated with the loan to make up your APR. Sounds pretty straight forward right. Just shop your loan by APR and you will get the best deal, right?
Wrong! If it were only that easy! It’s pretty easy to trick an APR to be lower than the next guy. A lender can reduce their normal par rate .125% or an eighth and increase their lender fees and then they will have a lower APR than the next lender who is simply offering the lowest par rate with the lowest lender fees.
The reason the lowest APR doesn’t always work is because it’s like buying down your mortgage rate. Does it make sense to buy down your rate? Well it depends on how long you plan on being in the home or even that specific mortgage.
For example – Ask the guy who paid a point to get a lower rate one year ago when rates were at the low 4’s and he is refinancing again today with no points in the mid 3’s if he thinks it’s a good idea to buy down your rate. Let me tell you. He doesn’t think so any more.
So although shopping by APR can be helpful, it’s not the solution to make sure you are getting the best deal. When you look at the rates I post every day you should notice they are the lowest rates of the day with NO lender fees. This means the rate and APR on the fixed rates (30-year, 20-year, 15-year, and 10-year) are the same.
If you really want to compare lenders, ask them this – “What is your lowest rate today with absolutely no lender fees?” This will give you a really great look at who you might want to work with. You will be surprised by the difference from lender to lender. That’s because although some lenders have great rates they have ridiculously high lenders fees.
If you thought this was good information or worth discussing, help me bring transparency to mortgage lending by sharing today’s episode on Facebook or Twitter.
Let’s change the way people shop for a mortgage…forever!
– Mike
PS. To ask a question, get advice, or find out if you’re getting the best deal possible on your loan, just post a comment below.

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