Mortgage Annual Percentage Rate Calculator

How to Use the Mortgage Annual Percentage Rate Calculator

Figuring out the actual cost of your mortgage can be tricky, but we’re here to help! The Mortgage Annual Percentage Rate Calculator helps you figure out the cost of your mortgage by providing an effective interest rate based on your principal amount, mortgage rate, closing costs and mortgage term. This allows you to compare mortgages more easily without weighing them down with unnecessary fees or having to do the math yourself. Let’s get started!

What is an Annual Percentage Rate (APR)?


The annual percentage rate calculation allows you to display the actual value of the mortgage for your investment property. This method also takes into account the amount of the closing fee, which is paid as part of the loan and discount points, and not just the interest rate.

This way you can determine how much you will have to pay for the mortgage if you leave it for the whole period.

Calculating the annual interest rate helps to compare different mortgage options. In this way, you can determine which option to choose. You should always look for a mortgage with the lowest cost. With two selected mortgages with the same mortgage rate, but different closing costs, the annual cost of payments for each of them will be different.

How to calculate annual percentage rate?


The annual interest rate can be calculated in three stages:

Add the mortgage fee to the principal amount of the loan. This amount will be taken into account for the calculation of the monthly mortgage payment.

At the mortgage interest rate, consider what the monthly payment will be if the commission is included in the mortgage amount and is not paid in advance.

Convert the determined payment cost into an interest rate.


APR Formula

APR = (Periodic Interest Rate * 365 Days) * 100


Periodic Interest Rate = [(Interest Expense + Total Fees) / Loan Principal] / Number of Days in Loan Term


To express the APR as a percentage, the amount must be multiplied by 100.


What to Include in the  annual percentage rate?


The mortgage rate takes into account only the cost of paying interest on the loan. However, when calculating the annual interest rate, the following indicators must be taken into account:

  • Mortgage interest
  • Mortgage origination points/mortgage origination fees
  • Private mortgage insurance
  • Cost of mortgage discount points
  • Mortgage broker fees
  • Legal fees
  • Most closing costs


What Not to Include in  annual percentage rate?


Particular attention should be paid to costs and fees that should not be included in the annual percentage rate calculation. This should be taken into account as the annual fee should be related to the cost of the loan.

Costs to be excluded from the calculation:

  • Title insurance
  • Cost of getting a credit report
  • Home appraisal
  • Home inspection
  • HOA fees
  • Notary fees




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These resources are for informational purposes only and should not be construed as legal advice. Landlords and Tenants are encouraged to seek specific legal advice for any of the issues as found in this blog.


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