Mortgage Annual Percentage Rate Calculator


Mortgage Annual Percentage Rate Calculator

Lenders usually advertise competitively low interest rates on mortgage loans to attract interested home buyers. However, interest rates are really only one piece of a larger picture when it comes to budgeting for your loan. You should also be aware of the mortgage percentage rate that you pay annually. 

Your mortgage annual percentage rate (APR) will be a more inclusive measurement, which means it’ll probably be higher than the interest rate advertised. Besides interest, your APR can include mortgage insurance, most closing costs, discount points, and loan origination fees. The Home Loan Expert is here to show you how using a mortgage APR calculator effectively can help you secure the best deal on a loan.

What is my Mortgage Annual Percentage Rate? 

Each year, you are charged a rate for your loan. This is your mortgage APR. It measures all the costs of a mortgage, from your interest rate to closing and upfront fees that are bundled into your total loan. Certain fees won’t be included in your APR, like credit reporting, appraisal, and inspection fees. You’ll want to ask your lender about which fees are included to get a more complete idea of your total loan amount. 

Time plays a significant role when it comes to budgeting for your APR. Homebuyers with long-term plans to stay in their house with a longer loan term will want to take out a loan that has the lowest APR. This is because you’ll end up paying the least to finance your house. For homebuyers who aren’t planning to stay in their home for more than two years, paying fewer upfront fees at a higher rate may put you in a better position financially. This is because the total APR cost will be less over the first few years.

How Can I Use a Mortgage APR Calculator?

A mortgage rate APR calculator uses your loan information and closing costs to calculate your APR expressed as a percentage. Fill in the entry fields below with the most accurate information to get a more complete estimate of your loan’s APR. 

  • Mortgage Amount. Enter the total amount you took out for your mortgage loan. 
  • Annual Interest Rate. You’ll find interest rates available in variable and fixed form. Loans with fixed rates maintain a consistent interest rate that is paid over the life of your loan. Adjustable-rate mortgages (ARM) feature variable interest rates. During the negotiated initial period on an ARM, the interest rate will usually be set at a competitively low price. Upon the completion of your negotiated initial period, you’ll enter into the variance period on your loan. This means your interest rate is subject to increase or decrease based on market conditions. Variable interest rates on ARMs are reset by your lender annually or semi-annually. 
  • Loan Term. Most homeowners have loan terms issued at intervals of 15 or 30 years. 10-year and 20-year terms offer alternative term options. When choosing which term is right for you, keep in mind that short-term loans require more aggressive monthly payments. This will help save you thousands of dollars otherwise paid in interest over the life of your loan. You can give yourself more purchasing power by using a longer-term loan with lower monthly payments.
  • Monthly Payments. Enter what you pay each month for your loan, this includes interest, the principal, and other bundled-in costs and fees. 
  • Origination Fee. This is the fee charged by your lender for processing your loan application. The origination fee is typically 0.5% to 1% of the loan amount.
  • Discount Points Paid. When you close on your loan, you have the option of paying down a specific percentage of the balance on your mortgage. These are known as discount or mortgage points. One discount point is equal to 1% of your mortgage, so one discount point for a $350,000 house would be $3,500.
  • Other Fees to Include. The loan application process requires you, your lender, and other third-party actors to negotiate your terms and conditions. This is where the remaining fees outside of your interest and principal come from. These fees are charged as part of your APR and vary by lender. You can expect to see taxes and escrow fees, legal and title fees, other documentation application processing fees, inspection and appraisal fees, insurance fees, and other closing costs needed to process your application.

What Isn’t Accounted for in APR? 

Although APR provides a more encompassing figure compared to your annual interest rate, there are still some fees that are not covered by APR. You’ll want to keep these fees in mind as they will also affect your upfront costs or monthly payments. Be aware of fees excluded from APR, such as:

  • Title examination fees
  • Title insurance fees
  • Property survey fees
  • Document preparation fees
  • Notary fees
  • Credit report fees
  • Property appraisal fees
  • Pest inspection fees
  • Flood hazard inspection fees

An even more inclusive measurement than your APR is your annual percentage year (APY) rate. It measures the compounding interest on your loan in addition to everything APR already does. As you can imagine, this rate is usually higher than your APR. It matters because compounding interest can considerably increase the cost of your loan. Be sure to get both the APR and the APY on paper before you sign a mortgage document. 

How Can The Home Loan Expert Help?

A mortgage APR calculator is a great place to start when you want to estimate a budget for your monthly payments. Still, you’ll want to find out what is included in your APR as it varies by lender. Speaking directly with a lending representative to understand what is included in your APR fees can give you a more exact estimate for your total loan amount.

The Home Loan Expert has helped borrowers plan to finance their dream home for more than a decade. We have nationwide expertise with a local vision, building our team of friendly lending Experts with people from the same communities we serve. This allows us to relate to our clients on a personal level and helps us get you a loan with the best rates and terms according to your budget. Our in-house underwriting process makes the loan approval process painless and efficient — with closing times in as little as two weeks.

So give us a call at 800-991-6494 to have some guidance in determining monthly payments that fit within your budget and to help you find out how your APR will affect your total loan amount today.


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