What You Need to Know
đź’ˇWhy This Calculator Matters
APR reveals the true cost of borrowing by including fees and points. Without it, you can't accurately compare loan offers.
👤Who Needs This
Mortgage shoppers comparing offers, anyone evaluating loan costs, or borrowers confused by rate vs. APR.
🎯Key Insight
APR is always higher than the rate when there are fees. A 6% rate with $6,000 in fees might have a 6.25% APR on a 30-year loan.
⚠️Common Mistake
Ignoring APR when a low rate has high fees. A "too good to be true" rate often comes with points that make the effective cost higher.
âś…Pro Tip
If you'll keep the loan long-term, paying points for a lower rate can make sense. If moving within 5 years, minimize upfront costs.
đź“ŠReal-World Example
Scenario: $300,000 loan: Option A is 6% with $9,000 fees, Option B is 6.25% with $3,000 fees
Option A APR: ~6.23%. Option B APR: ~6.33%
Option A costs more upfront but saves $45/month. Break-even: ~11 years. Choose based on how long you'll stay.
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