Personal Finance
Money Management

Is the annual percentage rate usually lower than the actual interest rate on the loan?

User Avatar
Wiki User
2007-07-20 03:48:59

The actual interest rate on a mortgage will always be higher

than the annual percentage rate unless the borrower keeps the loan

for the full term. Refinancing or selling before the end of the

term results in a much higher actual (effective) interest rate. The

effective rate on a mortgage can be lower than the annual

percentage rate (fixed rate) by paying extra to principal

especially early in the mortgage term.

Copyright © 2020 Multiply Media, LLC. All Rights Reserved. The material on this site can not be reproduced, distributed, transmitted, cached or otherwise used, except with prior written permission of Multiply.