The APR is designed to help consumers realize that there is a cost to getting credit that is not readily seen. The APR on an ARM loan is based on an assumption of what market conditions will be in the future, which will affect future rate adjustments. We recommend that you use the same loan program and loan amount when comparing the rates and fees of different lenders. We also feel it’s important to note that rates change daily; so same-day comparisons are key.
The Federal Truth in Lending (TIL) law requires that lenders disclose the APR when they advertise a rate. The APR is an attempt to identify the cost of consumer credit as a percentage rate. However, since most people do not keep the mortgage for the entire loan term, it may be misleading to spread the effect of some of these up front costs over the entire loan term.