That is exactly right. And when I bought using FHA, the MI drops off after 5 years which means my APR would then fall.
The better your credit the lower it will be.Remember, banks are not regulated by the government. They can still stick it to people even after a disaster in the housing market. In other words no one is playing big brother with the banks, hire a real estate attorney if you are clueless.
Sorry but this is inaccurate. Banks, mortgage lending et al are heavily regulated by the government. The TIL Act, Dodd-Frank Act, Ability -to-Pay-Rule to name a few. The various agencies, OCC, FDIC, SEC and the Feds.
The list goes on and on; I agree with your last statement. Getting legal advice is always a wise choice.
And just a little history from an old banker. Back when TIL was introduced we (the banks) had to start quoting APR and APY. Why? Because the government wanted consumers to be able to compare costs between each lender. The APR includes fees as stated above and the APY (annual percentage yield for savers) also includes fees. In the case of APR the fees were on top of the quoted interest rate and in the case of APY were subtracted from the interest rate. It also required banks to use uniform days/year and methods of calculation of the rates. We had to spend big bucks on new calculators (like 1K per calculator in 1981 dollars) to be able to write up our loans accurately. Even had a guy to come out and program them.
apr = rate + fees expressed as an interest rate.
the fed guv doesnt think you cant compare yourself, so they use this apr thing.
4.5% with 4.875% apr
4.625% with 4.75% apr
which is better?
the fed guv says the lowest apr.... but it fails to consider how long you plan on staying in the home.... so it is as useless as **bleep** on a boar. your fed guv at work.
the HUGE spread in rate to apr on fha is because pmi is for the life of the loan.
APR is the very first thing you should look at. It's how you can quickly and easily take into account hidden fees, points, etc. The issue of whether APR matters over the long run is the same issue as whether you should pay more points to get a lower rate. That has nothing to do with how badly you're getting screwed, but just with what your long term plans are. The APR tells you how badly you're getting screwed. If you plan to stay a long time, pay more points to get a lower rate. But don't accept a higher APR, because that means they're stealing some of the money you pay for the extra points.
Shop around for the best APR, and pay however many points make sense to you, while watching the APR to make sure it stays as low as possible. If paying your points makes the APR go up, keep shopping around for the best APR for that many points.