What fees are included in the APR (Annual Percentage Rate)?

16Jul/101

What fees are included in the APR (Annual Percentage Rate)?

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: Image via Wikipedia

The Annual Percentage Rate (APR) is one of the most misunderstood numbers there is on the mortgage documentation. Additionally it is the most easily abused and even though it is supposed to exist to protect shoppers can be so misconstrued as to actually harm the shopper. Be that as it may here are fees that must be included in the calculations for APR in the state of Georgia.

APR FEES
Processing Fee	Allowed
Underwriting Fee	Allowed
Origination Fee to Lender	Allowed
Discount Points to Lender	Allowed
Broker Fees for Services Rendered	Allowed
Commitment Fee	Allowed
Lock Fee	Allowed
Closing/Escrow Fee to	Allowed
Attorney’s Fee to	Allowed
Disbursement/Funding Fee	Allowed
Wire Transfer Fee	Allowed
Warehouse Fee	Allowed
Assignment Fee	Allowed
Amortization Schedule Fee	Allowed
Copy Fee	Allowed
Fax Fee	Allowed
Document Review Fee to Lender	Allowed
Courier or Express Mail Fee to	Allowed

The APR is the total cost of the loan over the life of the loan averaged with the base interest rate. For example if you have an interest rate or 4.5% and closing costs of $5000 on a $100,000 loan the .5% APR qualified closing costs would result in an APR of 4.923% while $10,000 in APR qualified closing costs on the same loan would result in an APR of 5.333%

The way this can be abused or manipulated is by charging a higher base rate and shifting the rate commission to cover some of the closing costs. Not that this is necessarily a bad thing but it gives a hint as to how this figure can be manipulated.

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Tagged as: annual percentage rate, Closing cost, georgia, Loan, mortgage, Points Leave a comment

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Brad Yzermans
February 2nd, 2011 - 19:44

awesome post on APR fees Ken…thanks.

( REPLY )

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