The annual percentage rate (APR) is the total annual cost of your mortgage loan. It includes the interest rate - the fee to borrow money calculated as a percentage of the amount borrowed -plus loan fees, points and any other charges. Required by the Truth-in-Lending Act, the APR allows you to effectively compare the mortgage rates of different loan programs.
Points
Points are determined as a percentage of your loan amount, paid at closing. For instance, on a $90,000 loan amount, 1 point = 1 % or $900. You may have the option to pay points to buy down (reduce) your interest rate. Alternatively, the lender may pay points to offset your closing costs in exchange for a higher rate. These are called negative points.
