Use this calculator to determine the Annual Percentage Rate
(APR) for your mortgage. Press the report button for a full
amortization schedule, either by year or by month.
Annual Percentage Rate (APR) is a standard calculation used by
lenders. It is designed to help borrowers compare different loan
options. For example, a loan with a lower stated interest rate may be
a bad value if its fees are too high. Likewise, a loan with a higher
stated rate with very low fees could be an exceptional value. APR
calculations incorporate these fees into a single rate. You can then
compare loans with different fees, rates or different terms. While APR
calculations may vary from lender to lender to a small degree, all
lenders must follow the same basic rules.
The first step is to calculate an APR payment amount. This is
done by adding your closing costs to your loan amount, and then
calculating a new monthly payment at your loan's interest rate. In
this case, if you borrowed (LOAN_AMOUNT + TOTAL_CLOSING_COSTS) at
INTEREST_RATE for TERM years, your APR monthly payment would be
LOAN_APR_PAYMENT. Notice that this is different than your actual
payment of MONTHLY_PI.
The second step is to calculate what interest rate produces a
monthly payment equal to the APR payment amount. In this case, we
calculate the interest rate that would require a LOAN_APR_PAYMENT
monthly payment on a loan of TERM years in the amount of LOAN_AMOUNT.
The result is LOAN_APR which is the APR for your loan.
Note: It is important to point out that the APR
for a loan with no fees is always the same as the stated interest rate.
If you have a loan where the lender pays you for taking a higher
interest rate, your APR for that loan may be lower than the
stated interest rate.
Information and interactive calculators are made available to you as self-help tools
for your personal independent use and are not intended to provide investment advice.
We can not and do not guarantee their applicability or accuracy in regards to your
individual circumstances. All examples are hypothetical and are for illustrative purposes.
We encourage you to seek personalized advice from qualified professionals regarding all
personal finance issues.