why is the apr lower than the mortgage rate?

PA Lender at 10:43 2010-02-10 said:

As an AE I periodically get this question from LOs and quite frankly my first thought is how and why are you still in this business if you do not know why this can happen.... sigh Permalink

hollycrap at 19:01 2010-02-10 said:

PA Lender: you sound like the liberal politicians who look down at the folks because we are just so dumb.

YOU may be able to understand how this COULD happen, but the fact is that it is deceiving to the folks who are looking to compare this to a fixed rate. YOU know that for all practical purposes that ARM is not going to be better than that low fixed rate; not in the long run anyway.

The APR was supposed to make it easier for the FOLKS to compare, and it is stupid! However... as long as YOU understand it... Permalink

PA Lender at 20:40 2010-02-10 said:

LOL ... probably the first time in my life anyone has used the word liberal in any way to describe me or anything related to me, thanks for the laugh.

Now maybe you have trouble reading since I believe I was very clear and referring to receiving these questions from LOs in the business. Understanding the documentation in our business is one of the "basics" that are required and if an LO or anyone else doesn't know or understand something as basic as what the APR represents, what the calculation takes into effect, etc. well they should just find a different field to work in..... and I guess you are correct I do look down on those people. Would you buy insurance from someone who didn't understand some of the basics in their field. Maybe you would?

You indicate that the Regulation was supposed to make it "easier" to compare ..... I don't remember anything in the Reg that said this .... though it was created to "inform" consumers about the terms and costs associated.

Now as far as using it to compare .... if someone is going to compare an apple to an orange (terms of a FRM to a ARM) I can't help that but a good LO should explain this to a prospective client.

Enough for now ..... my next class will be on how a FRM is not always the best choice. Permalink

hollycrap at 03:00 2010-02-11 said:

i only use the term liberal in that you remind of the elitist Obama people who act like they know best and we are just oo stupid to know what is good for us. Maybe its not just the "dumb" LOs and the folks, just maybe it is the APR system that has no meaning to the people it is suppose to be helping.

And, if it was not created to "make it easier for the folks to compare", then what is the purpose? Oh, maybe its just more regs to confuse... and keep the elitist sitting on their perch. You are a damn AE, requiring not even a high schoold diploma... get your nose out of the air.

I have been in this business for 30 yrs, the APR has always been a waste of time for the folks and now with the new good faiths... it has become just a stupid reg. not helping the people at all. Go preach to the people who keep coming up with regs instead of real solid ways of keeping the folks from being screwed by LOs who only want to make a killing on each loan. Permalink