Four Seasons Sotheby's International Realty
Four Seasons Sotheby's International Realty
MARIANNA VIS, Four Seasons Sotheby's International RealtyPhone: (603) 860-8115
Email: [email protected]

What is APR? Mortgage terms to know

by MARIANNA VIS 09/26/2022

When searching for a mortgage, many homeowners might wonder: “What is APR?” Mortgage loans have interest rates, but also other costs - this is where the annual percentage rate (APR) comes into play.

But what exactly does APR mean, and why does it matter for mortgages? Here is a basic guide to help you understand this crucial aspect of a loan estimate:


What is APR?

APR, or annual percentage rate, represents the amount of interest you’ll pay on a loan yearly. It’s a term you’re likely to encounter in the financial world, as credit card companies and lenders are required to include APR in their advertisements.


APR in mortgage loans

With mortgages, the advertised APR may be different from the mortgage interest rate. This is because the APR includes other factors like lender fees, closing costs, mortgage points and private mortgage insurance along with the regular interest rate.


APR vs interest rate

One simple way to compare APR and mortgage interest rates is to consider APR to be the “overall cost” of borrowing money for your home. While your mortgage rate directly affects your monthly mortgage payments, the APR reflects the total annual cost of the mortgage.

For this reason, many experts recommend comparing APR when shopping for a loan. The Truth in Lending Act (TILA) requires both lenders and credit card companies to disclose the APR up front, which makes it simpler to compare. However, it’s important to check with each individual lender to find out which fees are included in their advertised APR.

Mortgage APR is important to understand along with the myriad other financial terms in the real estate world. The more you know about what goes into your potential loan payments, the better decision you can make on a mortgage.


About the Author
Author

MARIANNA VIS

Why be ordinary when you can be remarkable? 

Marianna Vis of Four Seasons Sotheby’s International Realty’s Bedford office has over two decades of real estate experience in the Bedford, New Boston and Southern NH area, with 1000+ homes sold, over half a billion in sales, and consistently placing in the Top .1% of New Hampshire Realtors® year after year. Facilitating over 41 million dollars in New Hampshire home sales in 2023, Marianna is also the number one Listing agent in the town of Bedford, NH again …and has been the top Agent for neighboring New Boston for over 11 years. And she has placed in the “Top 10” REALTrends list of America’s Best Real Estate Agents since 2019.