Okay, nobody knows what APR means here... Here is the definition of APR:
APR is an expression of the cost the credit will cost you over the life of the loan as an interest rate. Example, if you have two loans both with $1,000 payments for 30 yrs, and one is a loan for 98K and the other for 100K, the difference between them HAS to be the rate, as that drives the payment.
What was done, is that some of the fees in the GFE (Good Faith Estimate) were deemed to be the same as paying interest - basically anything in the 800 section (aka lender fees, otehr than the appraisal, and certain 3rd party fees that have to be disclosed here, but are counted in) plus certain other fees, such as the closing fee, etc.
These are added up, and subtracted from the loan amount, and thus your APR is higher than the interest rate.
The reason this was done, is because most people (95%+) are not sufficiently educated to understand a GFE. What happened was that if I sent one with a rate of X and another lender a rate of Y, well at times looking at them, you cannot tell the difference between the offers, even those of us that know this, have a hard time doing so.
Your APR and rate are not off that much, so you are, just by looking at those numbers getting a deal that looks just fine. APR means nothing in this business, ineterst rate is what drives your payment and what you will pay over the life of the loan, not the APR. That was done to serve as an additional tool for people to use for comparing offers, and to protect consumers from hidden costs, which I think is a great use for consumers in general.
Now, most lenders today do not discriminate on down payment for rate. That is usually a mortgage broker thing, and something that does not typically happen with FHA or Flex programs, which I am guessing you are on.
Also, without knowing more, for instance, your income, and the whole profile of the deal, I nor anyone else here can adive you if you are getting a good deal, but based on what the market is doing right now, I would say you are.
A word of advice - I have closed 2,173 mortgages since 1998, and that does not include seconds or lines of credit. Go ahead and shop, but with the way the market is now, get your loan locked, and close it.
0.125 in rate difference for a 100K loan means $8 in payment per month; at 150 K it's $12, at 200K $16, etc. Realize one thing, rates are like gas prices, you have to paythem whether you like it or not. You will more than likely lose out if you expect rates to go down, or if you shop too much, and this comes from experience.
The most important thing is, can you HANDLE the payment including taxes, insurance, PMI and any other fees such as homeowner's Association dues, etc? If the answer is yes, then go with it, get locked, and make sure you lock with enough time for them to close the loan.
If you have 30 days to go, do a 45 day lock, not a 30-day lock, too may things can go wrong, and then it would expire...
Hope that helps.
ALSO, prequalifications mean nothing. They are not worth the paper they are written on, since your loan has not been approved.
Commercial & Residential Mortgage Consultant Since 1998