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I'm puzzled by the differnces in these 2 CUs offers for a ARM and would appreciate clarification:
1) rate 3.00 APR .3.07
2) rate 2.87 APR 3.125
Why is the disparity much higher on #2,?
@Anonymous wrote:I'm puzzled by the differnces in these 2 CUs offers for a ARM and would appreciate clarification:
1) rate 3.00 APR .3.07
2) rate 2.87 APR 3.125
Why is the disparity much higher on #2,?
APR takes into account your closing costs so their fees are slightly higher at closing but you have a much better interest rate. This is why you have to compare both the note rate and the APR. If you are going to be in the property for a long time, you want the lower rate but you need to check the other items too on an adjustable mortgage.
With an adjustable mortgage you need to check the index and the margin. Once you know these factors: note rate, APR, margin, index and adjustment terms then you can make a decision on the best ARM for you.
Uhhh, thanks for the reply, now I need an interpreter ;-)
I'm sorry
Here is a pretty good explanation of the terms and a link to the various indexes that are commonly used in ARM mortgages. Your LO should be able to show you the terms and explain the best and worst case senarios
http://www.mtgprofessor.com/A%20-%20ARMs/how_arms_work_simplified.htm
Here is a little bit easier explanation of the terms used in an ARM: http://www.bankrate.com/finance/mortgages/learn-the-basics-of-a-7-1-arm.aspx
Thanks again, I'll give them a gander