Posted on: 15th Dec, 2009 10:02 am
Please explain what is APR and how it is calculated.
APR or the Annual Percentage Rate is the actual interest rate that a borrower pays over the life of the loan. It includes not just the interest rate on the loan, but also the mortgage insurance, the upfront points and all other fees that a borrower pays towards the mortgage. There is standard formula that lenders use for the calculation of APR.
APR is the one common denominator by which you can compare loans side by side