It’s Just Time…What the Heck is APR?
First of all, the caption contest is still going strong! Enter your caption for last week’s post for your chance to win a fancy Just the Assistant t-shirt. Winner will be chosen by the funny police on Friday.
Did you know it’s possible to sleep standing up? It just happened to me in the middle of a MANDATORY meeting James called in which he and Chad went over Good Faith Estimates (remember that’s the document I never learned ?). They also discussed MI (I know that one – mortgage insurance) and APR (no clue).
Now that our branch has grown so much, there’s not enough room for all of us to sit in the conference room; that’s why I was standing.
I realize it’s tacky to up and leave meetings, and I normally wouldn’t recommend it. But y’all, it was so boring. I’m sure it was important information to know, but I just couldn’t hang. I up and left the meeting. Just walked right out.
Now that I’m out, I thought it’s time we all figured out what the heck APR really is. James started to tell me one time, but them rubbed his forehead and was like, “Can we do this some other time?”
But n0w that I get to write about the whole office, I’ve lassoed Jason and Will in to give me the scoop.
What the heck is APR
An Interview with Mortgage Banker and Online Dater Jason Bates and Mortgage Banker and V-shaped gambler Will Zugheri
Just the Assistant: Jason, I’ve been working in the mortgage industry for 6 ½ years now. Tell me, what the heck is APR?
Nikki (popping head over cube): None of us really know!
Jason: Here’s what happened. Investors needed a way to compare certain loans, so they took the base rate of a loan and took certain costs of that loan (origination, prepaid interest, notary fees, etc.) and calculated what those fees would represent as an annual percentage. It’s basically a finance whiz’s way of comparing loans to each other.
JTA stares blankly.
Jason: But here’s the thing – not all companies include the same fees within that APR. So borrowers shouldn’t just compare one APR to another APR. What borrowers should do is compare everything within a quote – the interest rate, processing fees, closings costs, discount points – the entire picture.
Coming from a large bank, I know this from experience. Large banks often charge anywhere from $1000 – $1400 in extra fees on top of every loan. So you can’t just compare rates.
Will (rolling chair over): This all came about during the savings and loan days.
JTA: What’s that? What are the savings and loan days? Like the good ole days?
Will: Yeah they were! It was back when mortgage bankers could do anything. What happened was back in the eighties some folks were saying, “We only charge 3% interest!” while every other bank was charging 18%. It was a way for credit unions to compete with big banks. But, they were charging all sorts of fees that made that 3% not be what it seemed. So investors created APR to try to compare what the rates really were.
JTA: You guys weren’t doing that though, right?
Jason and Will (talking over each other): No! We were riding skateboards in the eighties!
Just the Assistant: Okay thanks guys. I still don’t really know what APR is, but I appreciate your time.
Jason: Just make sure clients know that it’s one part of a big picture. And if they have any specific questions, call me! And check me out on Match.com.
[He didn’t say the match.com thing but I think it’s funny.]
If you’d like to know more about APR, get gambling tips from Will or dating advice from Jason (or a loan from either one of them because they’re both awesome), give us a call today!
And enter my caption contest so my mom will think people read my blog.