Annual Percentage Rate
Author: Rob K. Blake
Published: September 5, 2008
Annual Percentage Rate Defined
Annual Percentage Rate or APR is a rate of interest that includes certain costs and fees for the mortgage in addition to the interest rate expressed as a yearly rate. The APR rate is not the rate your payment is calculated from.
It was supposed to make mortgage shopping easier because the borrower could simply look at the APR rate for each mortgage company and compare them that way. If the interest rate is low and the APR is low then that would mean that lenders costs and fees were also lower.
However, that is not what happens. Since the APR is calculated by using the fees and costs, the mortgage company can manipulate those to make them look better than they really are. So, it is basically useless when mortgage shopping and comparing mortgage companies.
Author: Rob K. Blake
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