Comments on: APR, APY, and Mortgage Math: A Real World Example http://www.thesimpledollar.com/2010/10/26/apr-apy-and-mortgage-math-a-real-world-example/ Financial talk for the rest of us Sat, 16 Feb 2013 01:14:45 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: Ryan Loos http://www.thesimpledollar.com/2010/10/26/apr-apy-and-mortgage-math-a-real-world-example/#comment-928779 Ryan Loos Wed, 27 Oct 2010 13:31:22 +0000 http://www.thesimpledollar.com/?p=6161#comment-928779 I love how banks and other financial institutions can get away with this type of advertising without telling you all of the facts. Like in comment #3 about the credit score. This is just like in the auto industry when they advertise 0% interest loans but they know that is just a teaser rate to get someone on the dealership lot. About 65% of people who come in for the 0% do not qualify and end up with a higher interest rate.

]]> By: valleycat1 http://www.thesimpledollar.com/2010/10/26/apr-apy-and-mortgage-math-a-real-world-example/#comment-928746 valleycat1 Tue, 26 Oct 2010 20:46:44 +0000 http://www.thesimpledollar.com/?p=6161#comment-928746 Yes, Ruth (comment 3), and the criteria are completely invisible to the consumer & explanations from the lender as to why they can’t give you the best rate are inscrutable at best.

]]> By: Molly http://www.thesimpledollar.com/2010/10/26/apr-apy-and-mortgage-math-a-real-world-example/#comment-928744 Molly Tue, 26 Oct 2010 20:39:03 +0000 http://www.thesimpledollar.com/?p=6161#comment-928744 @Jonathan, it is the yield to the lender. The term APY seems to be consistently used across the industry like that – so if you have a savings account, you’re the lender, and the APY applies to you. The opposite is true when you have a loan or a credit card balance.

]]> By: Ruth http://www.thesimpledollar.com/2010/10/26/apr-apy-and-mortgage-math-a-real-world-example/#comment-928743 Ruth Tue, 26 Oct 2010 20:26:18 +0000 http://www.thesimpledollar.com/?p=6161#comment-928743 Another thing to look out for is that lending agencies advertise their BEST rate – and to get that rate you have to meet certain criteria, like a 730 credit score, for example. You may be offered a different best rate based on your credit score, current debts, income, etc.

]]> By: Jonathan http://www.thesimpledollar.com/2010/10/26/apr-apy-and-mortgage-math-a-real-world-example/#comment-928742 Jonathan Tue, 26 Oct 2010 20:19:50 +0000 http://www.thesimpledollar.com/?p=6161#comment-928742 I’ve always wondered something about APY, so now seems a good time to ask it. I understand APY when speaking in terms of a savings account. When talking about a loan, however, the term APY does not seem like an accurate term. The same concept applies, but it is not a yield for me in this case, it is what I’m paying in interest. I suppose you could say that the customer pays a 3.99 APR on the mortgage, and the lender receives a 4.22% APY, but that makes it sound like the bank is somehow getting more than the customer is paying them.

Sorry for the ramble. Basically I’m just trying to say that for loans there should be a separate term roughly equivalent to APY, but that more accurately reflects that it is the amount being paid, not the yield. Hope that makes sense.

]]> By: Molly http://www.thesimpledollar.com/2010/10/26/apr-apy-and-mortgage-math-a-real-world-example/#comment-928739 Molly Tue, 26 Oct 2010 20:05:07 +0000 http://www.thesimpledollar.com/?p=6161#comment-928739 These kinds of concrete number examples are very helpful. Thanks.

]]>