Annual Percentage Rate (APR)
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
Annual Percentage Rate (APR) is the yearly cost of a mortgage expressed as a percentage that folds in the interest rate plus lender fees and points.
What Annual Percentage Rate (APR) means
Because APR includes origination fees, discount points, and certain closing costs, it lets you compare two loan offers on a true cost basis rather than the headline rate alone. A low rate with high fees can carry a higher APR.
Florida example
A Florida lender quoting 6.5% with $8,000 in fees may show a 6.85% APR, while a 6.625% rate with $2,000 in fees lands near 6.72%. Comparing APRs on your Loan Estimates reveals which deal actually costs less.
Why APR matters when you shop
APR is your best tool for comparing loan offers. Two lenders can quote the same rate. One buries fees the other does not. APR pulls those fees into a single number so you compare apples to apples.
The catch is timing. APR assumes you keep the loan for its full term. Most Florida buyers move or refinance sooner. If you plan to sell in five years, a lower rate with higher fees may still cost less.
How to read it on your Loan Estimate
Every Loan Estimate lists both the rate and the APR. A wide gap between them means high fees. A tight gap means low fees. Line up two estimates and the cheaper deal shows itself.
Ask your broker to explain any fee you do not recognize. We walk through each line so nothing surprises you at closing. Clear numbers up front make for a smoother close.
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