APR stands for Annual Percentage Rate and its purpose is to give borrowers an accurate respresentation of the effective interest rate of a particular loan program. It allows borrowers to compare “apples to apples” when shopping loan offers from several lenders. APR factors in certain closing costs and spreads them over the life of the loan. Combine this with the note rate and you arrive at a more accurate annualized percentage rate than the note rate alone represents.
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