While a loan application’s Truth in Lending page will include your APR, many people find comfort in calculating the APR themselves. Be warned that it is not easy to do and unless you have a Masters degree in Applied Mathematics, you will probably need the aid of an online APR calculator.  

The basic figures you will need in order to make the calculation are:

1. Loan Amount

2. Your Lending Fees (origination, application, broker fees, etc.)

List of Items not included when calculating APR

1. Interest Rate 

2. Your Mortgage Terms

Example

With a Loan of $200,000 @ 6%, the borrower will pay a total of $231,676 in interest over the life of the loan. 

If the borrower is charged a total of $10,000 in closing costs, the total cost to borrow the money would be as follows:

$231,676 + $10,000 = $241,676 - the APR calculation is difficult, but there are various calculators on the net to figure out your APR.

In the above example, once the closing costs are factored in, the APR is 6.485% vs. your quoted rate of 6%.

What Items are and are not Included when Calulating APR?