APR

Categories: Loan and Mortgage, Credit and Debt, Real Estate, Legal, ,

The annual percentage rate, which must be reported by lenders under truth in lending regulations. It is a measure of credit cost to the borrower that takes account of the interest rate, points, and flat dollar charges by the lender. The charges covered by the APR also include mortgage insurance premiums, but not other payments to third parties, such as payments to title insurers or appraisers. The APR is adjusted for the time value of money, so that dollars paid by the borrower up-front carry a heavier weight than dollars paid in the future. However, the APR is calculated on the assumption that the loan runs to term, and is therefore potentially deceptive for borrowers with short time horizons. Read Does the annual percentage rate (APR) Help? Other articles about the APR are cited under Mandatory Mortgage Disclosure. For a summary of the differences between the APR and interest cost, see annual percentage rate Versus interest cost.