Convert a loan's rate, points, and fees into one true annual percentage rate — for any loan, or specifically for a mortgage.
Works for any fixed-rate loan, with control over how interest compounds and how often you pay.
Purpose-built for U.S. home loans, including points and PMI.
A lender's advertised interest rate only prices the cost of borrowing the money itself. It says nothing about the origination fees, points, or other upfront charges bundled into getting the loan in the first place. APR folds those costs in, answering a more useful question: given everything you're actually paying to get this loan, what single rate would produce the same total cost with zero fees? Because fees only ever add cost, APR is always at or above the note rate — never below it.
Interest can accrue on a different schedule than you pay it — a loan might compound daily internally while only billing you monthly. When that happens, the nominal rate has to be converted to an equivalent rate at your actual payment frequency before a payment amount can be calculated, which is exactly what the "Compound" and "Pay Back" settings do here. Most everyday loans compound and pay on the same schedule, in which case the distinction disappears entirely.
Points and other upfront charges affect the APR because they change how much you're truly borrowing relative to what you pay back — but points specifically are treated here as a cost of acquiring the rate itself, not an ongoing cash outlay tracked alongside your payment total. They still pull the APR above the note rate; they just aren't double-counted in the running total of payments and fees.
APR, whenever fees are involved. Two loans with identical interest rates can have very different true costs if one carries higher upfront fees — APR is built specifically to make that comparison fair.
Loaned (financed) fees increase the balance you're actually borrowing, so they raise your payment along with it. Upfront fees are paid separately in cash — they don't touch the loan balance or payment, but they still reduce what you effectively "got" for your money, which is why they still push the APR up.
Usually, but not always — a loan with a higher APR and lower upfront cost can still be cheaper overall if you plan to pay it off quickly, since you'd never stick around long enough for the fee difference to matter. APR assumes you hold the loan for its full term.
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