Many things come across in mind when we think about home loans. Taking a home loan isn’t easy and the most difficult part is to paying it regularly without missing a month. If you’ve seen your mortgage form you may have come across an Annual percentage rate (APR). You may think they are two different rates that you’re paying in a home loan, but that’s not the case.
Interest rate is something that you pay on your loan, but APR is interest rate along with different fees and other costs involved with purchasing a house. Not many finical institutions explain all the other charges and APR properly. However, Blackhawk State bank has also provided a mortgage APR calculator on their online site to maintain transparency and trust between their customers.
Blackhawk Bank was recently established as a subsidiary under Blackhawk Bancorp Inc. in 2019. The financial institution has been in business since 1880. Initially, it was named as Beloit Savings Bank. They have their branches all over Northern Illinois and Southern Wisconsin. They have various loan packages that help customers experience a comfortable place to invest and lead a peaceful life.
With the proper paperwork, you can easily understand all charges that are involved in a loan. This also makes it easier to calculate APR for a mortgage loan.
Expenses that are included in APR –
- Loan origination fees
- Discount points incurred during closing
- Insurance premiums
- Underwriting fees
- Documentation fees
- Loan application fees
- Insurance fees
Expenses that aren’t involved in APR –
- Attorney fees
- Title fees
- Notary fees
- Inspection cost
- Appraisal fees
- Transfer tax
- Fees for obtaining a credit report
- Escrow fees
It is good to compare APR when you decide to keep mortgage for more than 6 years. When you plan for a home mortgage, estimation is provided by the lender to the borrower. It has the list of all charges including the APR. You will always find APR is more than the normal interest rate.
Things get confusing when you start comparing APR for different tenure. At times, you will see that the interest rate in 30 years is higher than APR for 15 years term. Sometimes, even the financial institution gets isn’t capable to explain well. In such a case, you simply need to ask for a print of the loan estimate.
It is also wise to ask your lender all fees that they have included. Although it may be mentioned in the estimate copy, still your lender should also make it clear. If your ender is unable to explain, then it is wise to change your financial institution.