Annual Percentage Rate (APR)

The annual percentage rate (APR) is an interest rate that is different from the note rate. It is commonly used to compare loan programs from different lenders. The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise a rate. Typically the APR is found next to the rate. Example: 30-year fixed 8% 1 point 8.107% APR. It is important to note that the APR does NOT affect your monthly payments. Your monthly payments are a function of the interest rate and the length of the loan. The APR is designed to measure the "true cost of a loan". An APR does not tell you how long your rate is locked. A lender who offers you a 10-day rate lock may have a lower APR than a lender who offers you a 60-day rate lock! Calculating APRs on adjustable and balloon loans is even more complex because future rates are unknown. Use the APR as a starting point to compare loans. The APR is a result of a complex calculation and is not always clearly defined. There is no substitute to getting a good-faith estimate to compare costs. Ask your MorNext.com Loan Officer for any additional information.