today is November 2014 and this comes from the state of Illinois, US
I have received a mortgage preapproval letter that contains the following clause:
The type of loan chosen is FNMA Agency 30 Yr Fixed. The term of the loan is 360 months and the interest rate prequalified for (not locked) is 3.990% with an estimated APR of 4.296%.
It is confusing about the rates. I learned about compounding and the difference between APR and APY. Is this the same deal ? It does not seem so since APY is always greater than APR and what is quoted in my preapproval has higher APR.
Bank of America:
From these quote we see that the difference between rate and APR are 0.104% and 0.114% (quite close) whilst the differences in my preapproval letter is 3 times higher 0.306%
Is my lender taking me for a ride ? It appears to me as a red flag. What does my lender do differently. Please help me to interpret this.