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1 Sep

What does the APR on some of the documents mean and how is it different from my mortgage rate?

General

Posted by: Joel Olson

On some of our forms you will see an interest rate and an annual percentage rate. This two numbers are not the same.

:The definition of an APR is  the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loanmortgage loancredit card, etc. It is a finance charge expressed as an annual rate”

In other words, your APR includes the cost of your mortgage for the year, For example should you pay $1000 in legal fees and $1000 in interest fees for one year on the mortgage, and your mortgage is $100,000. Your APR would be 2%.

In most cases, in terms of a mortgage this is an irrelevant number. However, if you were given a credit card with a 30% APR and 5% interest rate, you would know there is a a fee you are paying that you are not aware of.