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Real Estate Glossary

effective interest rate

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Written by Luis Escobar

Expressed as a percentage, effective interest rate is the cost of credit on an annual basis. This includes an up-front payment to acquire the loan. It is typically a higher amount than the interest rate specified in the mortgage note. Effective interest rate is useful in comparing loan programs with different points and rates.

Expressed as a percentage, effective interest rate is the cost of credit on an annual basis. This includes an up-front payment to acquire the loan. It is typically a higher amount than the interest rate specified in the mortgage note. Effective interest rate is useful in comparing loan programs with different points and rates.

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Luis Escobar

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