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See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

What do the acronyms APR, FRM and ARM mean?

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APR stands for Annual Percentage Rate. This number includes some of the various costs of obtaining a mortgage loan and converts them into a single value in order to help you comparison shop for your loan. However, it is a misunderstood and often misleading number and can actually cause more confusion than it alleviates. Due to what is a rather flawed calculation, many ARMs have APRs far less than their actual contract interest rates, when it should be the other way around.

FRM and ARM are simple -- Fixed Rate Mortgage (FRM) and Adjustable Rate Mortgage (ARM) -- two basic types of mortgages. FRMs have interest rates which never change, while ARMs have rates that can change anywhere from one time over a 30-year term to more than 360 times.

To learn more about the acronyms and terms used in real estate and mortgage market, check out HSH's Glossary of Mortgage Terms.

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Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
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Q: How are mortgage interest rates determined?
AUG 18, 2022
A:

Mortgage rates fluctuate from day to day, depending on a number of factors related to the economy and to choices made by investors. While some mortgage money comes from deposits held by banks and credit unions, most of the funds for borrowers come from investors in capital markets.

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Q: Will today's stock market influence tomorrow's mortgage rates?
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Mortgage rates are influenced by a variety of factors, rather than moving in lockstep with any one economic indicator. The stock market rises and falls for a wide variety of reasons, including global, economic and political issues, but as a broad rule of thumb, a rising stock market indicates optimism among investors about the economy.

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A:

For the most part, this is a discussion about time. You should compare the total costs of the difference in the two interest rates over your given time horizon.

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