Understanding the APR

The overall price of a mortgage goes beyond the loan’s given interest rate, which is used to calculate the monthly principal and interest payment.

Annual percentage rate, or “APR” is a more complete measure of a loan’s cost.  APR is a yearly percentage rate that expresses the total finance charge on a loan over its entire term.  The APR includes the interest rate, broker fees, points, and mortgage insurance.  Because all lenders follow the same rules to ensure the accuracy of the APR, it provides consumers with a good basis for comparing the cost of loans.  

Think you’ve found the lowest interest rate?  The APR can provide useful information, but there are other criteria to look at when choosing a loan.  Look at the whole package and evaluate your long-term objectives when choosing a loan.  A loan with a higher rate may offer other benefits not evident in the rate differential.  Some additional factors or questions to keep in mind when selecting a loan:


  • What’s the lender’s reputation for quality and customer service?
  • Will the lender be there for you if you need assistance?
  • How long will you need to wait for firm loan approval?
  • How long do you have to lock loan pricing, and what costs are involved?
  • If you do lock the rate range, do have any options if rates go down?
  • What are the loan’s down payment and closing cost options?

For further information on selecting a lender, please give me a call!  Jill Anderson 402.618.9984

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