APR Calculator
Don't be fooled by low interest rates. This APR calculator helps you uncover the 'hidden' costs of borrowing by factoring in origination fees and points, giving you the true annual cost.
Origination, points, and other closing costs
What is APR?
APR stands for Annual Percentage Rate. It represents the actual yearly cost of borrowing money, including both the interest rate and any mandatory fees or charges associated with the loan.
How is APR different from the interest rate?
The interest rate only covers the cost of borrowing the principal. The APR is almost always higher because it includes other costs like origination fees, mortgage insurance, and points. It provides a more accurate way to compare different loan offers.
Why does APR matter for my mortgage?
For a mortgage, the APR accounts for closing costs and other fees. Even if two lenders offer the same interest rate, the one with lower fees will have a lower APR and be the cheaper loan in the long run.
Can the APR change during the loan?
For fixed-rate loans, the APR remains constant. For adjustable-rate mortgages (ARMs), the APR can change as the interest rate adjusts based on market conditions.