Why is the Annual Percentage Rate different than my interest rate on the Federal Truth-In-Lending Disclosure?
There are two rates on the Truth-In-Lending disclosure which is also known as the T-I-L, pronounced till. The rate in the upper right hand corner is the note rate, or the rate that you were quoted. You may or not be locked at this rate. The rate in the upper left hand corner is known as the APR, or annual percentage rate. The APR is different than your note rate, or the rate that you were quoted, because the APR includes in addition to interest, some of the additional costs of obtaining your financing. Simply stated, if there were no costs in obtaining your financing, your note rate and the APR would be the same. But that is rarely the case because of the closing costs associated with the loan. For some loans, and when it is to your advantage, we can waive our fees and pay the outside closing costs, such as title company fees, appraiser fees, etc. for you. One important item to remember though, there is no such thing as a free lunch. When you have no closing costs we must charge you a
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