What does APR mean for a home mortgage?
Would someone explain to me in plain English (think "Mortgages for Dummies" here) what is included in APR?
I know what APR stands for and everything. What I'm interested in is what is included in the APR that brings my rate from something like 6.5 up to 6.7? That seems like a lot of money over 30 years so I want to know what I'm paying for.
- Quicken LoansLv 51 decade agoFavorite Answer
The Annual Percentage Rate (APR) and the Annual Interest Rate are the two interest rates applied to your loan. The Actual Rate is the annual interest rate you pay on your loan (sometimes referred to as the "note rate"), and is the rate used to calculate your monthly payments.
The APR includes both your interest and any additional costs or prepaid finance charges you might pay, such as prepaid interest, private mortgage insurance, closing fees, points, etc. Your APR represents the total cost of credit on a yearly basis after all charges are taken into consideration. It will usually be slightly higher than your Actual Rate because it includes these additional items and assumes you will keep the loan to maturity.
Hope that helps!
- 1 decade ago
APR stands for Annual Percentage Rate. "In the U.S., the calculation and disclosure of APR is governed by the Truth in Lending Act (also known as Regulation Z). In general, APR in the United States is expressed as the periodic interest rate times the number of compounding periods in a year... (also known as the nominal interest rate); since the APR must include certain non-interest charges and fees, however, it requires more detailed calculation"
- 1 decade ago
Annual Profit Rate
- How do you think about the answers? You can sign in to vote the answer.
- Anonymous4 years ago
Thank you! Extremely valuable information and it gives me better knowledge on this subject
- 4 years ago
Great question, hope people can give some insightful answers