APR(Annual Percentage Rate)
What is APR?
The APR is not the actual rate or note rate advertised by the lender. It is the effective rate which represents the cost of borrowing a mortgage loan. Lenders calculate APR taking into account the closing costs and the interest rate on a mortgage. As a borrower, you too can calculate the APR using the APR Calculator.
The Annual Percentage Rate is often used to compare mortgage lenders and the programs they offer. However, it is not an effective tool for lender/loan comparison because a mortgage with high APR may often be a better option compared to one with a low APR.
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[...] Annual Percentage Rate(APR) shouldn’t be considered as the only factor to compare mortgage lenders or loans. One should [...]