Posted on: 09th Apr, 2004 01:10 am
Note Rate is the mortgage rate stated on a promissory note. It is also known as the Nominal Rate or Face Interest Rate.
For example, Andrew took a loan of $100,000 for 7 years at 6% interest rate. He signed the promissory note, which stated the terms and conditions of the loan along with the interest rate. This interest rate is known as Note Rate.
The note rate determines your monthly mortgage payment. For a fixed rate loan, the note rate remains fixed throughout the loan term. But for an adjustable rate mortgage, note rate refers to the initial interest rate that remains fixed for a certain period of time after which the rate adjusts.
One should not confuse the note rate with APR or the Annual Percentage Rate which often reflects the true cost of financing. There is a difference between the two with APR being the sum of the note rate and the different costs associated with the loan.
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For example, Andrew took a loan of $100,000 for 7 years at 6% interest rate. He signed the promissory note, which stated the terms and conditions of the loan along with the interest rate. This interest rate is known as Note Rate.
The note rate determines your monthly mortgage payment. For a fixed rate loan, the note rate remains fixed throughout the loan term. But for an adjustable rate mortgage, note rate refers to the initial interest rate that remains fixed for a certain period of time after which the rate adjusts.
One should not confuse the note rate with APR or the Annual Percentage Rate which often reflects the true cost of financing. There is a difference between the two with APR being the sum of the note rate and the different costs associated with the loan.
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I have a mortgage in which i was told that adjustable rate note is my promissory note. i understand the difference, but how is this?
You will receive the promissory note from the lender which will mention the actual rate of your mortgage. You will receive the APR as a part of the TIL disclosure.