Base vs. Annual Percentage Rate 101

Base vs Annual Percentage Rate

Base vs. Annual Percentage Rate 101

Predict what you’ll pay by understanding base rate vs. annual percentage rate.

When you apply for a mortgage, your primary concern is whether or not you can afford it right now. After all, you assume you’ll only be earning more money over time.

That doesn’t mean that you should skip taking a look at your long-term homeownership costs, though. In order to get a clear idea of what your mortgage will cost you over time, you need to understand the difference between your base rate and your annual percentage rate (APR).

Your base rate is how much you’re going to pay for your monthly mortgage dues right now. Your APR factors in how much your rate will fluctuate over the years, mortgage points, other fees like brokerage, processing, and underwriting costs, and more.

Basically, your base rate is how much you’ll have due in principle and interest, while your APR considers all of the other costs that will come due for you. When you’re looking for a mortgage lender who will give you the best deal, you can’t just choose the one with the best base rate. You need to consider the APR, which will give you a clear breakdown of all of the other fees you’re going to be charged.

In other words, if you want to know which home loan will truly be the most affordable in the long run, you need to look closely at APR. Make sure you don’t choose a lender who offers a low base rate only to hit you with a bunch of fees over the years!

When you find your mortgage lender, it’s important you choose one who will help you understand not just your upfront costs, but your homeownership costs over time. To make sure you have all the info you need to make an educated decision about your mortgage, contact Ranch & Coast Mortgage Group Inc. Serving homeowners in Solana Beach and the surrounding California cities, we’re committed to helping people get completely clear comprehension about their home loans.