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What does the Annual percentage rate consists of?
The APR, Annual Percentage Rate, is the sum of all anticipated closing costs converted to a percentage rate so mortgage loan borrowers can shop. In my opinion, it is worthless because when a mortgage loan originator gives you an estimated costs of third party charges, they are overflating the charges on the Good Faith Estimate so they do not get in trouble with the mortgage regulators. You cannot underdisclose,but you can overdisclose as much as you want. For example, if the tentative title charges are $1,000 , a mortgage broker can disclose on the Good Faith Estimate that the title charges are $2,000. However, if the mortgage broker discloses that the title charges are $500 and it comes out to be $1,000, the mortgage broker needs to pay the difference between the $500 and $1,000 even though the mortgage broker has nothing to do with the fees and costs of title charges. Most mortgage brokers will over disclose due to this reason and by over disclosing, your APR will go through the roof. Here is an article on APR:



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