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The interest rate (or note rate) is what the lender charges on the unpaid balance month by month. APR includes the rate plus origination fees, closing costs, and PMI — annualized per Reg Z. APR is always ≥ rate; the gap is the fee load. When comparing offers, use APR.

On long-term loans (30-year mortgages especially), interest at the typical 6-8% range adds up to more than the principal because each month's interest accrues on the still-large balance. A 30-year, 7% mortgage on $300k pays $418k in interest over the loan life — 39% more than the principal. The fix: shorter term or extra principal payments.

Only if you cannot afford a shorter term. Otherwise, shorter terms save substantial interest. A $20k personal loan at 12%: 36 months → $3,914 interest; 48 months → $5,289; 60 months → $6,693. The 5-year option costs $2,779 more than the 3-year for a $185 lower monthly payment.

On most modern loans, yes — extra payments above the scheduled amount go directly to principal and reduce future interest. Some older loans or auto loans have weird quirks; double-check with the lender that extra payments aren't held in 'suspense' or applied to future scheduled payments. Always specify 'apply to principal' in writing if there is any ambiguity.

Yes, but watch the closing costs. Refinancing usually costs 2-5% of the loan amount. Run the math: new payment − old payment × months you would hold = total savings. If closing costs > total savings, it is a wash. The right time to refinance: rates dropped 1+ percentage point AND you will hold the loan ≥ 3 years.

Amortization is the process of paying down a loan via fixed payments that include both interest and principal. Each month: interest portion = balance × rate; principal portion = payment − interest; new balance = old balance − principal. Early on, most of the payment is interest because the balance is large. Late in the term, most goes to principal.

Per the Homeowners Protection Act of 1998, mortgage servicers must automatically cancel PMI at 22% equity (78% LTV) based on the original amortization schedule. You can request earlier cancellation at 20% equity if you have a clean payment record. Some loans (FHA) require PMI for the loan life regardless of equity — check your specific loan terms.

A discount point is an upfront fee paid to the lender to lower the interest rate. 1 point = 1% of the loan amount. Each point typically buys 0.25 percentage points off the rate. Whether they are worth it depends on how long you will hold the loan: longer holds = points pay back; short holds = points lose money. The break-even is usually 5-7 years.

Late fee (typically $25-50 for personal loans, 4-5% of payment for mortgages), and after 30 days, the lender reports the late payment to credit bureaus, dropping your credit score 50-100 points. After 90+ days late, the loan can go into default, triggering acceleration (entire balance due) and collections. Always communicate with the lender if you anticipate trouble — most have hardship programs that beat default.

Generally yes, but check for prepayment penalties. Federal law prohibits prepayment penalties on most mortgages (Dodd-Frank QM rule), but some auto and personal loans still have them — typically 1-2% of the remaining balance, in effect for the first 1-3 years. Read the prepayment terms before signing.