Know The Numbers

Credit Report

With your permission the lender will access your credit history and find your credit score.

Application / Processing Fee

Lenders charge an application and processing fee to cover the time and cost of evaluating your financial ability to repay their loan. Certain lenders refund this fee to you at closing.

What is APR?

The APR is the Annual Percentage Rate that you will be charged on your loan. It is based on the total of all your borrowing costs and is charged on the loan balance.

e.g.  After fees, your lender’s original rate quote of 4.875% might become a 5% APR loan. That means you will pay about $5,000 per year in interest for every $100,000 borrowed.  The length of the loan term (for example 15, 20, or 30 years) determines the amount of the principal payments.

Indexes

Changes in indexes such as the Federal Funds Rate and the Treasury Bill will cause interest rates on a variable rate loan to adjust periodically.

Points

A point is a one-time, pre-paid interest payment. This payment is calculated as a percentage of the loan, and may range from 0.25% to 2% of the loan balance. Points are tax-deductible and are paid upfront.  We recommend you consult your tax advisor as each borrower’s financial picture is different.

Appraisal Cost

The lender hires an independent appraiser to evaluate the property’s purchase price. An appraiser will evaluate the condition and size of the property compared to similar recent neighborhood sales.  Appraisal costs vary by region, property type and the type of appraisal.

Miscellaneous Fees

As your loan is being processed certain charges may occur.  Courier, notary and county recording fees are common fees that may accrue.

Prepayment Penalties

Some lenders charge penalties if you refinance or sell your property.  These penalties may apply during a certain period of your loan. It is important to understand the terms at time of closing.  

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