Question:

Definition of Annual Percentage Rate (APR)

Answer:

The annual percentage rate (APR) is an expression of the interest paid by the borrower after all loan related costs are taken into account. The APR will be different from the interest rate for the mortgage, as it will include other fees.

The APR may be advertised in the quote, or a lender may choose not to disclose it. Also, APR by different lenders may take different items into account and therefore you may need to obtain a Good Faith Estimate to compare items one by one, rather than compare only loan APR.

The annual percentage rate is also called annual effective interest rate. If APR has to be calculated without fees, it would amount to the monthly interest multiplied by 12. The same APR for loans of the same amount, but over different periods of time will amount to different monthly payments and different total interest paid.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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