Frequently Asked Questions
Interest Rate vs APR
Confusing and mysterious is "annual percentage rates" for mortgage loans. The interest rate and APR don't always make sense.
Interest rate is simply the percentage rate that a lender applies to your mortgage balance to determine the amount of interest due.
The annual percentage rate (APR) includes the interest rate, plus other charges and fees. These can include "points", mortgage insurance, prepaid interest, origination fees, tax service fee, and any buy-down funds.
The lender is required to disclose both the mortgage interest rate and annual percentage rate. If you have a choice of several loan programs, the APR is a good indicator of the true costs of both.
Best suggestion is to go to Fannie Mae http://www.HomePath.com website. Then access the true cost calculator from the calculator link at the top. The system will give you before-tax and after-tax cost of your loan.