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Annual Percentage Rate (APR)

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The cost to borrow money expressed as a yearly percentage, the APR helps you compare loan prices.
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APR — a basic outline

Many things can affect the cost of a loan. For mortgage loans, the annual percentage rate typically includes the interest rate plus other charges or fees, such as mortgage insurance, discount points, and origination fees.

  • Interest rate. Cost you pay to a lender for borrowing funds. Expressed as a percentage of the loan amount.
  • Origination charges. Amount that includes all charges (other than discount points) the lender receives for originating the loan, including miscellaneous fees like prepaid interest.
  • Discount points. A buyer or seller can pay discount points to reduce a loan's interest rate. This may be a good option if you plan to stay in your home for a while. One discount point costs 1% of your loan amount; however, 1 point will typically reduce the interest rate by less than 1%. This can reduce your monthly payment and the interest you pay over the life of a fixed-rate loan. Discount points may also be tax deductible (talk to a tax advisor for details).
  • Mortgage insurance. If you put less than 20% down, mortgage insurance is usually required.

What is APR?

Video - What is APR?

We break down the components that make up the annual percentage rate.

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Choosing the right lender

The mortgage lender you choose is just as important as a low APR. We're here for you with years of experience and a full range of banking services. Plus, you get ongoing support because we continue to service most of the loans we close.

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Mortgage insurance premium 

A financial obligation a borrower pays to either the FHA or a private insurer to insure the mortgage lender against loss from a borrower’s default. Upfront and monthly mortgage insurance is required on FHA and monthly mortgage insurance is typically required on conforming loans when the down payment is less than 20%.