Effective Annual Percentage Rate (APR) Math Tool
Expose hidden mortgage origination fees and padded discount points by combining them into the true federal APR signature. Reveal the actual baseline cost of your loan.
Result Data
How to Use This Calculator
Get accurate results in seconds by following these simple steps.
Enter Note Rate
Input the quoted promissory note interest rate from your lender.
Add All Fees
Enter discount points, origination fees, and any other prepaid finance charges.
Reveal True APR
See the federally mandated APR that exposes the total cost of borrowing.
Why Use This Tool?
Hidden Fee Detection
Expose lender fees disguised behind attractive advertised interest rates.
TILA Compliance
Uses the same Truth-in-Lending methodology required by federal regulators.
Lender Comparison
Compare lenders by APR instead of note rate for a dramatically more honest picture.
Unveiling Truth in Lending
The 'Promissory Note Rate' is the interest rate you physically sign on the loan agreement. It is the number the bank advertises to capture your lead.
The true 'Annualized Percentage Rate' (APR) is mandated by the federal Truth in Lending Act.
It protects consumers by forcing banks to calculate what the interest rate would be if they took all secretive closing costs and discount point revenue and stuffed them inside the loan balance itself.
This simulator utilizes a powerful iterative numerical solver algorithm.
It reverse-engineers exactly how much financial mathematical damage the lender's upfront fees are inflicting.
The resulting APR allows you to securely and accurately compare the raw cost of two structurally different mortgages side-by-side.
Frequently Asked Questions
Because you are paying heavy upfront closing costs and lender fees to obtain the loan. The APR takes those upfront thousands of dollars, divides them over 360 months, and translates that burden straight back into a percentage to expose the reality of the banking contract.
Strictly by APR. A lender offering a 5.5% interest rate with a 6.0% APR is charging you massive upfront fees. A lender offering a 5.75% rate with a 5.8% APR is offering an infinitely more honest, cheaper loan structuring.
No. Only fees strictly charged by the lender to secure the financing (underwriting, points, origination) are included in the finance charge. Third-party title, appraisal, and attorney fees are generally excluded from APR.
Under the federal Truth in Lending Act (Regulation Z), lenders cannot advertise an interest rate without simultaneously disclosing the fully-loaded APR in equal prominence to prevent consumer deception.
Yes and no. A high APR indicates massive upfront fees. If you sell quickly, you will not have time to recover those fees through lower monthly payments, meaning the high APR was actually a severe warning.
Yes. PMI is strictly required by the lender as a condition of financing when you put less than 20% down. Therefore, it is federally classified as a finance charge and directly balloons your APR.
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