How Do I Calculate Mortgage Interest APR?

Some borrowers make the mistake of confusing the interest rate extended by the lender with the APR (annual percentage rate). The mortgage APR is the true cost of the loan. It reflects points, processing fees, document costs and additional financing fees that you have to pay when you open the loan. The lender must quote the APR of the loan to you on your final closing paperwork, but you should figure it out before even deciding on a lender. Determining the mortgage interest APR is a complex calculation made simple by using one of the convenient APR calculators available online.

Step 1

Use MortgageFit's APR calculator to determine the mortgage interest APR. It asks for the amount you've borrowed as well as processing fee, appraisal fee and any other costs you have to pay to get the loan. The result displays the APR along with your monthly payment and total interest you'll pay over the course of the loan. You can also change the interest rate right from the results screen to see how that changes the APR.

Step 2

Calculate the mortgage interest APR using the calculator at the Mortgage Loan Directory website. You may need to install a Java plug-in to your browser to use the tool. Enter any origination fees or point percentage you paid on the loan as well as additional financing costs in the boxes provided. The calculator tool displays the mortgage APR at the top of the screen along with a chart showing how your principal balance changes over the years.

Step 3

Determine your APR using the calculator at Money-zine.com. The tool asks for your basic loan information (principal, interest rate and term) as well as any percentage points paid at closing and your application, processing and other lender fees. When you hit the "Calculate" button, the tool displays the APR at the bottom along with your estimated monthly payment.

About the Author

Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.