What is APR

“APR” stands for annual percentage rate. It is a measure of the cost of borrowing, expressed as a yearly rate. The calculation includes interest as well as other loan fees and mortgage insurance paid on the loan.  All lenders by federal law are required to disclose APR within three days of a borrower making formal loan application. This provides consumers with a good tool for comparing the actual cost of different loan programs. APR on a fixed rate mortgage will always be a higher rate then the note rate, except in the case of an adjustable rate mortgage (ARM).

It is important to remember that APR does not determine a loan programs’ monthly payment but rather is a calculation to help borrowers understand the true cost of a loan. The monthly payment will be determined by the note rate. 

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