Which fees should be included in the APR?

-Check with your company on what fees they have designated as APR fees-

The following fees ARE generally included in the APR:

• Points - both discount points and origination points. 1 point equals 1% of the loan amount.
• Pre-paid interest- The interest paid from the date the loan closes to the end of the month. If you close on August 10th, you will pay 21 days of pre-paid interest.
• Admin Fee
• Loan-processing fee
• Underwriting fee
• Document-preparation fee
• Private mortgage-insurance
• Escrow/Settlement fee

The following fees are SOMETIMES included in the APR (check your compliance department for these):

• Loan-application fee
• Credit life insurance (insurance that pays off the mortgage in the event of a borrower's death)

The following fees are normally NOT included in the APR:

• Title or abstract fee
• Attorney fee
• Notary fee
• Document preparation (charged by the closing agent)
• Home-inspection fees
• Recording fee
• Transfer taxes
• Credit report
• Appraisal fee

In Mortgage Coach, prepaid escrows is a non-APR field that can be used for upfront reserves as needed.

Annual Percentage Rate (APR) Definition

The APR is a measure of the cost of credit, expressed as a nominal yearly rate based on the amount and timing of the payments made by the consumer. Since an APR measures the total cost of credit, including costs such as transaction charges or premiums for credit guarantee insurance, it is not an interest rate, as that term is generally used. The APR is a function of:

• the amount financed
• the finance charged
• the payment scheduled

For mortgage loans, the APR must be disclosed as a single rate only, whether the loan has a single interest rate, a variable interest rate, a discounted variable interest rate, or graduated payments based on separate interest rates (step rates). In addition, the APR must appear with the segregated disclosures. In the case of open-ended credit (HELOC), a disclosure may also be made regarding the APR using the daily periodic rate.

Relevant Law/Regulation(s): 12 CFR §1026.22