Mortgage Loan: Annual Percentage Rate (APR) and the Truth in Lending Act

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Mortgage Loan: Annual Percentage Rate (APR) and the Truth in Lending Act
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By Louie Latour

If you are in the market for a mortgage it is important to understand what the Annual Percentage Rate means and what you need to know in order to find the best mortgage. Here are tips to help you shop smartly for your mortgage loan.

Comparison shopping for a mortgage can be a difficult task. Mortgage lenders use one interest rate to calculate your monthly payment but advertise a different interest rate. What does it all mean anyhow? When you shop for a mortgage it is important to understand the difference in the two interest rates. Here is what you need to know.

Annual Percentage Rate

The Annual Percentage rate (APR) is calculated by factoring in interest charges and any other fees charged by mortgage lenders over the duration of the loan. APR is expressed as a yearly expense. This formula gives you a good (but not great) estimate of the cost of any given loan offer.

Truth in Lending

Legislation in the United States,

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