Two banks offer 30-year $150,000 mortgages at 8.5% and charge $1,000 loan application fee. Bank X refunds the fee if the application is denied, bank Y does not. The current disclosure law requires that any fees that will be refunded if the applicant is rejected be included in calculating APR, but this is not required with nonrefundable fees (presumably because refundable fees are part of the loan rather than a fee). Now I know that for the refundable rate EAR=8.92% APR=8.57% and for the nonrefundable rate EAR=8.84% and APR=8.50%. But how do I actually calculate these here EARs and APRs on these two loans. So please could you provide me with a workout scheme for my problem. Thanks for the attention.
EAR vs APR
May 02, 2005
2 Replies
Find another bank. You should be able to get rates much lower.
I just refinanced, I got a rate that was much lower.
Run don't walk to another source for your mortgage.
DW,
In the USA, IIRC, interest rates for mortgages, car loans, etc., and even insurance premiums are directly related to an individual's credit "Score". Your "credit risk" score may be higher than the OP's. Therefore, the interest rate you receive will be lower, as you pose less a credit risk.
Just a thought.
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