What fees are not included in mortgage APR?

Mortgage APR (Annual Percentage Rate) is a metric that includes the interest rate and certain fees associated with obtaining a mortgage loan. However, certain fees may not be included in the APR calculation. The fees excluded in the APR calculation can be closing costs such as origination fees, title insurance, notary fees, home inspection fees, appraisal fees, transfer taxes, and recording fees. Additionally, some lenders may charge additional fees such as application fees, underwriting fees, or prepayment penalties which would not be included in the APR. It's important to review the loan estimate you receive from the lender which will list the APR and other costs associated with the loan.

When interest rates and APRs look too good to be true, it's a good idea to check whether other fees such as discount points are involved. There are also other fees that the APR may or may not be considering or making assumptions on without a personalized quote. While APR is a good starting point, we strongly recommend getting a personalized quote and comparing the comprehensive closing costs especially when comparing lenders with CapCenter.

It is important to note that upfront costs on mortgages are not conveyed well in APRs because APRs are calculated for the life of the loan (e.g. 30 years) and high upfront costs make a small dent on the APR of a long-term loan with a high balance especially when calculated across the full loan term. Since many home owners move or refinance before the full loan term, CapCenter offers loan products with zero or low upfront costs that offer more flexibility to shorter time horizons.