What Does Mortgage APR Indicate?

Originally posted 2009-12-02 05:00:48. Republished by Blog Post Promoter

This post is written by Steven Parker.  Steven Parker is a financial writer and contributor for the last five years.  He specializes in mortgage and real estate industry and has written many articles on mortgage, reverse mortgage, loan modification, foreclosure and many more.

Mortgage APR or Annual Percentage Rate helps you to assess the total cost of the loan in percentage. For instance, if your mortgage attracts a rate of 10%, it means that you will be required to shell out USD$10 for every USD$100 you borrow yearly. Borrowers usually try to get a mortgage loan that has the lowest APR.

Mortgage APR however doesn’t affect your monthly mortgage payments. This is because your monthly mortgage payments take into account the interest rate and not the mortgage APR.

What does mortgage APR include?

The APR includes the following in its calculations-

• Pre-paid interests
• Points
• Underwriting fees
• Loan processing fees etc.
• Fees for preparing documents
• Private mortgage insurance

In addition to the above, under certain circumstances, the following fees may be included too. They are –

• Credit life insurance
• Loan application fee

Fees excluded from APR calculation

The mortgage APR doesn’t take into account the following types of fees in its calculation-

• Appraisal fees
• Notary fees
• Attorney fees
• Transfer taxes
• Fees from Escrow and Title
• Credit Reporting fees
• Recording fees
• Home Inspection fees etc

In other words, the mortgage APR helps you to find out the amount you have to pay as closing cost. It is mandatory as per Federal Truth in Lending Laws that the lender has to disclose the mortgage APR to the borrower.

It is important that you compare the rates from lender to another. You can also compare the Annual Percentage Rate online. It helps you to shop around for the correct deal. It is also important to remember that getting a low mortgage APR doesn’t necessarily mean that you are getting a good deal. Read the fine print before signing the agreement when you opt for a mortgage.

How Can You Negotiate Loan Modification Terms With your Lender?

This post is written by Steven Parker.  Steven Parker is a Financial writer and contributor since five years.  He specializes in mortgage and real estate industry written many articles on Mortgage, Reverse mortgage, Loan modification, Foreclosure and many more.

For the purpose of preventing a foreclosure, loan modification is one of the most proven choices that people are going for. Normally, people see it as a difficult thing to understand. However, it is not so difficult. Prior to going to the mortgage lender or bank, it is essential that you get correct and comprehensive details about the procedure.

Following are some tips that would assist you to negotiate loan modification terms with your lender successfully:

Before anything else, you should ensure that you communicate with your lender prior to they register a “Notice of Default”. You have to request the lender the moment you understand that you don’t have the capacity to make the minimum payments or instantly when you have skipped one. You should not hang around for them to call you.

Secondly, you should write a financial hardship letter with all your financial information and address accompanied by your income proofs. You should not hide anything or mislead while furnishing your details.

You should post the correspondence by a certified mail and ensure that you get an acknowledgement of receipt of the correspondence.

You should communicate with the loan modification division of the lender or bank via their official websites or by calling them up.

Always jot down the timing of your phone calls, names of the individuals whom you spoke with and what was discussed to you.

Prior to discussing with the lender, you have to be very much clear-cut about your future strategies. For example, if you are confident that you wish to establish in your home for a long time, you should attempt to locate the best possible deal on loan modification for an extensive term, such as 20-30 years.

Collect as much details as you can about the guidelines of the bank and take advantage of them. You must utilize them in such a way that you can garner the maximum advantage of your research.

You must determine the amount of monthly mortgage payment that you are able to afford. For this, you have to figure out your debt to income ratio and furnish it to the lender.

You should search for some professional assistance from experienced counselors employed by the Federal Housing and Urban Development Department (HUD) in the United States. They would offer expert consultations and advices on how to handle your finances, go to the lenders and function as your representative (in case there is a requirement). These facilities are rendered without cost since the Federal Government makes payments to them for these facilities.

A bonus of $1,000 has been declared by President Obama for homeowners who are choosing loan modification rather than foreclosure or short sale.