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    Mortgage Interest Rate versus APR

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    Time value of money has many applications in the business world as well as in our own financial decisions.

    Task: Read a recent article (online, newspaper, magazine) that gives advice to individuals about interest rates as they relate to one of these topics: retirement planning; bank accounts; home mortgages; or automobile loans. Provide a brief summary of the advice given (250 words or less). Please cite the link to the article in APA provide the link to the article.

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    Solution Preview

    Please see the attached Word 97-2003 document.

    A home buyer needs to be aware of a mortgage loan's stated interest rate as well as its annual percentage rate (APR). While its stated interest rate is the rate of interest the lender will charge on the outstanding principal balance (basically the monthly mortgage payment excluding impounds such as real estate taxes and homeowner's insurance), the APR ...

    Solution Summary

    This solution discusses the difference between a mortgage loan's stated interest rate and its annual percentage rate. It also discusses how a homeowner's time horizon dictates which of these numbers the homeowner should focus on.