Advertised rate vs. your eligible reduced rate

A mortgage rate table may look precise to three decimal places, but the number is only useful when you know what it represents. For a Navy Federal borrower considering a No-Refi Rate Drop, four values are easy to confuse: the advertised interest rate, discount points, APR, and the Eligible Reduced Rate calculated for the existing loan.

The advertised rate is a market signal. The Eligible Reduced Rate is the number that matters for the program's threshold. APR is a broader cost measure used to compare loan offers, and points are an upfront cost that may make an advertised interest rate look lower. None of these values should be substituted for another without an explanation.

A lender's public table describes a scenario, not a promise to every borrower. Published rates can depend on loan size, occupancy, property type, credit assumptions, down payment, term, and the purchase of points. They can also change during the day. Navy Federal characterizes its published mortgage rates as “as low as” rates.

DropAlert records selected rows from Navy Federal's public tables to identify direction and possible threshold crossings. A timestamp tells you when the public source was checked; it does not turn that source into a personalized quote.

One point generally equals 1% of the loan amount paid upfront. Discount points trade more cash at closing for a lower interest rate. Origination points can compensate the lender for making the loan. The label and economic effect matter, so borrowers should review the actual loan documents instead of assuming every point lowers the rate by the same amount.

Navy Federal specifically says that origination or discount points applied to obtain the original Note Rate are not applied when it calculates the Eligible Reduced Rate. It also warns that removing point effects can make the applicable base rate higher than the advertised rate.

APR is designed to express certain loan costs as an annualized percentage. It can help compare new mortgage offers that have different rates and fees, but it is not the same as the note's interest rate and it is not Navy Federal's rate-reduction threshold. The Consumer Financial Protection Bureau recommends comparing standardized Loan Estimates for the same loan type and reviewing both interest and fees.

A No-Refi Rate Drop modifies an existing loan rather than originating a replacement loan. That makes a conventional purchase-or-refinance APR comparison less direct. For this decision, the current fee, expected principal-and-interest savings, effective date, and how long you expect to keep the loan are usually more intuitive inputs.

Navy Federal's disclosure describes a Base Rate for the applicable product at the time of the request. It then adjusts that rate for characteristics of the existing loan to produce the Eligible Reduced Rate. Only Navy Federal has the account and loan details needed for that calculation.

The program's current rate condition compares the Eligible Reduced Rate with the borrower's Note Rate. The reduction must be at least 0.25 percentage points. A public row can cross that boundary while the loan-specific rate does not, especially when the advertised row includes points or different assumptions.

When the public row lists discount points, DropAlert adds an estimated point effect to the advertised rate before comparing it with the alert threshold. The present heuristic assumes approximately 0.25 percentage points of rate for each point. This is an engineering estimate, not a Navy Federal formula, and real point pricing is not fixed.

That adjustment is intentionally conservative compared with treating the advertised rate as point-free, but it still cannot model borrower-specific adjustments. The result should be read as “worth checking,” not “approved” or “guaranteed.” The methodology page documents the exact transformation and known failure modes.

• Navy Federal No-Refi Rate Drop disclosure and FAQs
• CFPB Loan Estimate explainer

Sources and this explanation were reviewed on August 4, 2026.