Anyone who pays taxes knows what April 15th means. That’s the last day to pay any taxes owed to the federal government from the prior year. But, if you’re in the market to buy your first home this year, you may be eligible for a federal tax credit that could make April 15th a day to look forward to for years to come! No kidding, here’s why.
Like lots of people, I used to ask that same question. Since most of us don’t have PhDs in math, the term APR – annual percentage rate – and what goes into calculating it can be both intimidating and confusing. A great resource to learn more APRs is from the new federal Consumer Finance Protection Bureau.
According to the Bureau, the APR is a broader measure of the total cost to you of borrowing money over and above the actual interest rate. The APR reflects not only the interest rate but also the costs of getting a loan, such as points, broker fees, and certain other charges that you have to pay to get the loan, including some of your closing costs.
Generally speaking, the higher the costs associated with getting that loan, the higher your APR will be. Rarely will an APR and interest rate be the same number. By law, lenders are required to follow strict formulas for calculating APRs.
You can use the APR to compare one loan offer against another. So, if you want to make the best decision possible, always look at the APR and not just the interest rate. Also, don’t forget to compare the same loan types – fixed rate vs. fixed rate, for example. You can find additional consumer information at the Consumer Finance Protection Bureau.
