As part of the GetReady phase, we have provided answers to many frequently asked questions.
What is the difference between a fixed and an adjustable rate loan?
With a fixed rate loan, your interest rate will never change, meaning your monthly payment amount will always remain the same. Conversely, adjustable rate loan rates are tied to an index, which may cause your monthly payment amounts to vary. The type of loan you opt for should be based on several factors, including how much you can afford each month and how long you plan to live in your new home.
Why should I refinance?
- Changing the remaining term of a loan
- Switching from an adjustable rate loan to a fixed rate loan, or vice-versa
- Reduce monthly payments with a lower interest rate and/or longer term
- Higher total amount to acquire funds for other expenses
APR vs. Interest Rate?
The interest rate simply describes the cost of borrowing money proportional to the loan amount. By comparison, APR (annual percentage rate) factors in any applicable fees to express the full cost of a loan, making it easier for consumers to compare true costs. Keep in mind that an adjustable rate loan’s APR does not reflect all possible future interest rate adjustments, so comparing to fixed rate loans in this fashion can be inaccurate.
What is prepaid interest?
Any interest which accrues between your closing date and the last calendar day of that month is considered prepaid interest.