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What is Annual Percentage Rate (as listed on lenders Truth-In-Lending disclosure)?

April 26, 2017Annual Percentage Rate disclosure lenders truth-in-lending

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What is Annual Percentage Rate (as listed on lenders Truth-In-Lending disclosure)?

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This is not the Note rate for which the borrower applied. The Annual Percentage Rate (APR) is the cost of the loan in percentage then taking into account various loan charges and closing costs of which interest is only one such charge. Other charges used in calculation of the APR are Private Mortgage Insurance3 (PMI) or FHA Mortgage Insurance Premium (when applicable) and Prepaid Finance Charges (loan discount, origination fees, prepaid interest and other credit costs). The APR is calculated by spreading these charges over the life of the loan, which results in a rate higher than the interest rate shown on your Mortgage/Deed of Trust Note. If interest were the only Finance Charge, then the interest rate and the APR would be the same.