What You Need to Know
Why 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.
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.
Real-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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