How do I calculate the APR of a home mortgage?
Renting & Real Estate
orign8 asked:
How do I calculate the APR of a home mortgage to compare program rates and fees?
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How do I calculate the APR of a home mortgage to compare program rates and fees?
Caffeinated Content
October 20th, 2008 at 5:09 am
Why would you need to?
You are given a Truth In Lending statement that the lender could run for each hoome you are looking for.
By law they have to provide that to you within 3 business days of loan application.
October 23rd, 2008 at 1:19 am
APR is one of the most useless calculations out there. As with all things set by the government, it was designed as a babysitting tool for the all too vulnerable consumer. APR is a way of presenting the overall cost of a loan in terms of an interest rate. What they do is take the loan’s actual interest rate. Let’s say 6.5% and then factor in the lender’s closing costs and other fees to determine an APR over the life of the loan. The reason the calculation is so useless is because there are very loose requirements on what fees are required to be included in the APR calculation and what are not. Every lender calculates it a little differently. Your best bet is to find an interest rate that is attractive to you and then make sure you understand every cost associated with the loan. If you are comparing 2 lenders and the interest rates are largely different, then make sure the lender with the better rate, isn’t just charging a ton in other fees to make up for the lower rate.