Tuesday, March 08, 2011

What Is APR for Mortgage Loans? What Is APR?

Very simply, APR stands for Annual Percentage Rate. Unfortunately, that's where the 'simply' ends. The intent of APR is to provide a single number that consumers can use to decide which of many loans, with many parameters, provides the best (ie least) cost option. All lending institutions must provide a calculated APR for each and every loan they write.

But, calculating the APR is a complex task, depending on the various parameters enter into a specific loan. Terms such as 'prepayed interest', application fees, points, etc all enter into the calculation.  I found an article on AllBusiness.Com (a D&B Company) that nicely explains the APR. Check it out at AllBusiness.com.

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