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interest rates

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Is Interest Rate and APR the Same Thing?

If you’re in the market for a mortgage, car loan or considering a different credit card, you pay attention to the low rates advertised. Interestingly though, it’s never mentioned what kind of rate the ad is referring to: the basic interest rate or the annual percentage rate (APR). Only one rate tells the full story of how much borrowing that money will cost you. It’s the APR. Here’s the difference: Interest rates reflect the cost you pay each year to borrow $25,000 for a car or $100,000 for a home. It’s a percentage of that principal and it’s determined by many factors, namely how much it costs the lender to borrow money from the Federal Reserve, as well as your credit score. APRs represent the real cost to you in repaying the required amount each year. This rate includes the interest rate on the principal (above) plus any extra interest…

Should You Pay Off Your Mortgage Early?

Have you ever compared the purchase price of your home with the amount you’ll actually end up spending to pay it off over the life of the mortgage? If you have, you’ll know the sobering realization that comes with seeing just how much your home will cost you, and the inevitable question that follows – should I pay off the mortgage now, so I don’t have to fork over all that interest? It’s an exhilarating thought, freeing up so much extra cash. But when it comes down to it, whether you should actually pay off your mortgage early is dependent on many things – primarily, your overall financial situation, your attitude toward investment, your life stage and how you would make it happen. Do the Math From a purely mathematical perspective, most experts agree it is not a smart idea to pay off your mortgage early – especially if you…