Mortgage Annual Percentage Rate Calculator

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When deciding if the loan you plan to take out on a home fits within your budget, you will want to be aware of the mortgage Annual Percentage Rate (APR). Usually, the loan is advertised with the interest rate, which is the fee charged by your lender for issuing your loan. Interest rates tend to make the loan seem more attractive as they are usually set lower than the mortgage APR. That’s because an APR includes the interest rate as well as other costs and fees rolled into your loan. Hero Loan 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? 

Your mortgage APR is the yearly rate you are charged for your loan. It measures all the costs of a mortgage, including the interest paid over the life of the loan, origination fees, closing costs, and discount points. APR may not include fees like credit reporting, appraisal, and inspection fees. You’ll want to ask your lender about these fees to get a more complete idea of your total loan amount. 

When shopping for a house on the market, keep in mind your short and long-term plans. If you plan to stay in your house for the long haul with a longer loan term, take out a loan that has the lowest APR because you’ll end up paying the least to finance your house. If you aren’t planning to stay too long, paying fewer upfront fees at a higher rate may put you in a better position financially as the total APR cost will be less over the first few years.

How Can I Use a Mortgage Rate 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. This is the total amount you took out for your mortgage loan. 
  • Annual Interest Rate. Interest rates come in two forms: variable and fixed. For fixed-rate loans, the amount of interest you pay will remain constant 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. Once the initial period ends, the interest rate moves at certain intervals in alignment with market conditions. Variable interest rates on ARMs are reset by your lender annually or semi-annually. 
  • Loan Term. Enter the period of time over which you expect to repay your loan. Loan terms are typically issued in increments of 15 or 30 years; however, 10 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. More long-term loans can give you more purchasing power by lowering your monthly payments.
  • Monthly Payments. Enter your monthly principal and interest payment. 
  • 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. These are points that are paid upfront that knock off a portion of your mortgage. One discount point is equal to 1% of your mortgage, so one discount point for a $350,000 house would be $3,500.
  • VA Funding Fee. This fee is unique to the VA loan program. It is charged to ensure that future military service members may benefit from this entitlement program. For first-time VA loan users, the fee is set at 2.3%. For subsequent VA loan users, the fee increases to 3.6%. It can be reduced with a 5% down payment.
  • Other Fees to Include. These are the remaining fees charged as part of your APR and vary by lender. They can include mortgage broker fees, transaction fees, mortgage insurance, application and processing fees, legal fees, mortgage underwriter fees, and other closing costs.

What Isn’t Accounted for in APR? 

APR is a more inclusive rate compared to your annual interest rate. There are still some fees that are not covered by APR that will 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

Last, APR does not measure compounding interest. Your annual percentage year (APY) does. 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 Hero Loan Help?

A mortgage payment calculator with APR is a useful tool when you’re trying to budget for monthly payments and figure out how much you will pay over the life of the loan. Because APR rates vary by lender, you’ll want to speak directly with a lending representative to understand what is included in their APR fees.

At Hero Loan, we are on a mission to get veterans, military service members, and their families into their dream homes by getting them the best deal possible on a loan. Our team of knowledgeable lending Experts comes from the same communities we serve and helps them relate to their clients’ home budgeting needs. 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; we can help you determine monthly payments that fit within your budget. We can also be reached through our application to help you find out how your APR will affect your total loan amount today.