The APR on a mortgage is the annual percentage rate, which is a calculation of the rate of interest and the cost of the loan. Learn more about the annual percentage rate with advice from an experienced mortgage broker in this free video on personal finance.
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Hi this is Matt McKillen with Innovative Financial Group. I recently had a client went to a closing and they had a question for me, that was, "What is the APR on my mortgage?" The definition of APR is annual percentage rate. Now what the APR is determined by is what the effective rate of the loan is, for example lets say your interest rate is at five and a half percent. But if you refinance for example what they do is they calculate how much that rate is going to that loan is going to cost you in a finance charge over the thirty years of your mortgage, and if there were fees involved to refinance the property whether you may have paid discount points, were there appraisal title fees? The federal requires through truth and lending that we disclose all those costs and they can be calculated into that finance charge and amortized over the loan. So many times when people go to their loan closing even though their interest rate on their mortgage may only be five and a half percent, the APR might be slightly higher it might be at five point eight or five point nine only because the cost involved to get that loan are included in calculating what their annual percentage rate is over fifteen twenty or thirty years. But do not be confused again the rate of interest that you are paying is what is on your note the APR is just a calculation showing what that cost of the loan is with your closing cost over the life of the mortgage. Thanks for asking the question, my name is Matt McKillen, I am with Innovative Financial Group.