The APR Calculator works out the real annual percentage rate of a loan once fees are included, for general loans and for mortgages with points and fees.
Real APR: 6.563%
| Amount financed | $100,000.00 |
| Upfront out-of-pocket fees | $2,500.00 |
| Payment | $1,110.21 |
| Total of 120 payments | $133,224.60 |
| Total interest | $33,224.60 |
| All payments and fees | $135,724.60 |
| Real APR | 6.563% |
Real APR: 6.367%
| Loan amount | $280,000.00 |
| Down payment | $70,000.00 |
| Monthly payment | $1,714.91 |
| Total interest | $337,368.73 |
| Points and fees | $4,900.00 |
| Real APR | 6.367% |
The annual percentage rate (APR) is the yearly cost of a loan including interest and most fees, expressed as a rate. U.S. lenders must disclose it under the Truth in Lending Act so borrowers can compare loans with different fee structures fairly.
The interest rate applies only to the amount borrowed. Fees such as origination charges, points and mortgage insurance increase what you actually pay. APR spreads those costs over the loan term, so it is always equal to or higher than the interest rate.
Worked example (defaults): $100,000 at 6% for 10 years with $2,500 of upfront fees. The payment is $1,110.21, but because you effectively received only $97,500 the real APR is about 6.55%.
APR assumes you keep the loan for the full term. If you sell or refinance early, upfront fees weigh more heavily and the effective cost is higher than the APR. Some costs, such as appraisal and title fees, are excluded from mortgage APR.
What is APY? The annual percentage yield includes compounding and is used for savings.
Are points worth paying? Only if you keep the loan long enough to recover them through lower payments.
What fees are in APR? Usually origination fees, points, broker fees and mortgage insurance.