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Home value
This is how much the property you wish to buy has been valued at. This data is only used to calculate the mortgage amount. If you know your loan amount, skip this field.
Down payment
The part of the price that you pay in cash and do not finance with a mortgage loan. If you modify either of the input fields, the other one will be automatically populated with the correct data. If you know your loan amount, skip this field.
Mortgage amount
The total amount of money to be borrowed from a lender or lending institution. This amount is applied toward the price of the property. Your payment amount heavily depends on this information.
Interest rate
The yearly interest rate or percentage rate that you, the borrower pay on your outstanding balance in the form of interest to the lender.
Mortgage length
Enter the mortgage length either in years or in months. If you modify one of the input fields, the other one will be automatically populated.
Payment frequency
This is the time interval between your payments. Choose from weekly, bi-weekly, monthly, bi-monthly, quarterly, semi-annually or annually options.
Origination fee
A fee charged to a borrower (especially for a mortgage loan) by a lender on entering into a loan agreement to cover the cost of certain processing expenses.
Discount points paid
The amount of money the borrower must pay the lender or lending institution to get a mortgage loan at a stated interest rate.
Other fees
Other fees relating to the process of mortgage application. This amount of money have to be paid to the lender by the borrower.
Annual percentage rate
Mortgage APR is a value created according to a government formula and is intended to reflect the true annual cost of borrowing. It is designed to allow customers to compare one type of loan to another. It includes interest and other mortgage loan fees. It is expressed as a yearly percentage rate. Required to be disclosed by the lender under the American Truth in Lending Act, Regulation Z.
Periodic payment
Periodic payment is the regularly paid amount of money to the lender or lending institution. It includes principal and interest, but excludes any amounts that are applied to taxes and insurance. Periodic payment is based on the annual interest rate, and NOT on APR. Annual percentage rate is ONLY for loan comparison.
Closing costs
These are expenses of administrative nature connected with the mortgage loan agreement. They are generally paid at the end of the life of the loan.
APY vs APR
Although annual percentage yield (APY) and annual percentage rate (APR) are different, they are both effective rates. Effective rates convert compound interest rates to simple interest rates.
For CDs (certificate of deposit) and savings accounts we use APY and for loans and fixed-rate mortgages we use APR. Various interest rates can be easily compared using the APY calculator and the APR calculator.
We also offer a mortgage APR calculator as well, which includes origination fee, discount points and other payable fees.
Annual percentage yield vs annual percentage rate
One of the main difference between annual percentage yield and annual percentage rate is in their usage. Banks and other financial institutions used to describe savings accounts with APY, while lenders used to describe loan and mortgage products with APR.
The other significant difference between the APR and APY is that APY considers compounding and APR does not consider compounding. We are talking about compounding, when the earned interest is added to the base principal, and from that time, both the principal and the added interest earns interest as well.
Because of this APY (also known as EAR) is higher than the APR. The consumer who is receiving (earned) money from the financial institution on his savings account, wants the highest APY in his setting, while the consumer who pays interest on the borrowed money wants the lowest APR in his setting.
To find out how to calculate annual percentage yield or annual percentage rate, please read the what is apy and what is apr articles.
To simplify the process of interest rate conversions, please use one of our tools: the apy calculator or the APR calculator.
Mortgage annual percentage rate
Any kind of loan or mortgage loan related financial product must include a number called APR in their advertisement. This acronym stands for the annual percentage rate. Probably you have already noticed, that this APR is always higher than the annual interest rate.
The US Government passed the Truth in Lending Act (a federal law) that requires lenders to quote APR to potential borrowers. With this annual percentage rate you can compare one mortgage offer costs against another mortgage offer costs.
There are several factors that go into determining the APR rate on a mortgage. For fixed rate mortgages it depends on the note rate, origination fee, discount points and other fees.
While many people believe that the lowest interest rate mortgage will be the best option, choosing the mortgage with lowest APR is actually the best choice. You should also keep in mind that the annual percentage rate assumes you will keep the loan for its full term.
To find out how to calculate mortgage annual percentage rate, please select the 'learn more' » 'find out what is apr' form the menu above.
