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How important is an APR?

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The APR is the cost of your loan in percentage terms taking into account various loan charges. Your interest rate is only one of the charges taken into account for your APR calculation.

Other charges included in your APR calculation are mortgage insurance (if required) and other prepaid finance charges, such as origination fees and prepaid interest. The APR is calculated by spreading these charges over the life your loan, which results in a rate that is typically a bit higher than your interest rate. APR calculation is standardized across the industry. It is a powerful tool at your disposal to help you compare our costs with other lenders.