Mortgage

QWhat Is The Apr?
AProbably one of the most confusing things about mortgages and other loans is the calculation of interest. With variations in compounding, terms, and other factors, it's hard to compare apples to apples when comparing mortgages. Sometimes it seems like we're comparing apples to grapefruits. However, lenders are required by the Federal Truth in Lending Act to disclose the effective percentage rate as well as the total finance charge in dollars. The annual percentage rate (APR) that you hear so much about allows you to make true comparisons of the actual costs of loans. The APR is the average annual finance charge (which includes fees and other loan costs) divided by the amount borrowed. It is expressed as an annual percentage rate -- hence, its name. The APR will be slightly higher than the interest rate the lender is charging because it includes all (or most) of the other fees that the loan carries with it, such as the origination fee, points, PMI premiums, etc.