APR is calculated in similar ways by mortgage lenders, which makes it a useful tool to compare home loan costs. Annual percentage rates are expressed as percentages and can include:
Interest charges which is the cost you'll pay to borrow money based on the loan's interest rate.
Some mortgages require you to pay discount points to get a specific interest rate. One point is equal to 1% of the loan amount. If your loan has mortgage discount points, their costs are included in APR. You can also choose to pay points for some loans. Lender fees sometimes called "origination fees" and might be charged by lenders to process your loan application. These can be a percentage of the loan amount. They are included in the APR. If a loan requires you to pay for mortgage insurance, the cost is included in its annual percentage rate. Loan-related fees such as settlement/closing fee, courier fee, and wire fee paid at closing are included in the APR.