What is the APR?
To protect the public, congress decided that a more precise measure of the true cost of a mortgage loan was needed. The concept of the annual percentage rate (APR) was developed to more accurately reflect this cost factor. The APR represents not only the rate of interest charged on the loan but certain other pre-paid finance charges. These costs are expressed in terms of percent and may include, among other costs, the following: origination fees, loan discount points, private mortgage insurance premiums, and the estimated interest pro-rated from the closing date to the end of the month. Please note: What may appear as a low interest rate may have a lot of optional loan discount points added to increase the effective rate to the lender. Reviewing the APR will help you to determine if this type of situation exists. When shopping for mortgage rates, get the APR from your lender to make sure you have an accurate comparison to other available mortgage rates.
APR is an acronym for Annual Percentage Rate. It is the actual interest rate, taking into account points and other finance charges, for the projected life of a mortgage. Disclosure of the APR is required by the Truth-In-Lending Law and allows borrowers to compare the actual costs of different mortgage loans.
The concept of the annual percentage rate (APR) was developed to more accurately reflect a more presice cost factor. The APR represents not only the rate of interest charged on the loan but certain other finance charges. An APR is expressed in terms of percentages and may include the following costs: origination fees, loan discount points, private mortgage insurance premiums, and the estimated interest pro-rated from the closing date to the end of the month. Please not that what may appear as a low interest rate may have a lot of optional loan discount points added to increase the effective rate to the lender. Reviewing the APR will help you to determine if this type of situation exists. When shopping for mortgage rates, get the APR from your lender to make sure you have an accurate comparison to other available mortgage rates.
