Pre Loader



How to Understand the Annual Percentage Rate (APR) on Your Mortgage Loan

The federal government requires mortgage lenders to disclose the “annual percentage rate” (APR) whenever they advertise a loan program. But what is APR, and does it really matter to you? Here’s the thing: APR lumps all your “finance charges” into your interest rate. As you can see from the list below, some of your closing costs are considered “finance charges.” APR is calculated by adding all these finance charges to the total interest that you’ll pay over the life of the mortgage. An annual interest rate is then calculated based on that total number. APR CLOSING COSTS & PREPAID ITEMS (FINANCE CHARGES): Origination Charges and Points Processing and Underwriting Fees Mortgage Insurance (monthly and upfront) Closing Agent Fees Retained by Mortgage Company, or Closing Fees