• Every mortgage has an APR.hipoteca americana image by caironbohemio from Fotolia.com
  
  The APR, or annual percentage rate, is the numerical representation of the entire cost of the mortgage for a full year. This number includes the monthly interest rate and the closing costs associated with the loan. The formula to calculate this percentage rate is federally mandated and is useful to borrowers looking to procure a mortgage. In comparing mortgage APRs, a borrower finds the cheapest mortgage by locating the lowest APR. The APR is disclosed on the Truth-in-Lending statement given to each borrower at the completion of the mortgage application.
  
  

Origination Fee

• The origination fee is typically one percent of the loan amount. This fee compensates the lender for originating, or completing, the mortgage loan.
  
  

Discount Points

• Discount points, or simply points, are fees charged to a borrower to purchase a lower interest rate. Points are not required in the transaction. It is an option any borrower can request to get a lower interest rate.
  
  

Monthly Interest Rate

• The APR includes the monthly interest rate. This is where most borrowers get confused. The monthly interest rate is always lower than the APR and the APR is not the same number as the monthly interest rate.
  
  

Taxes

• Each state's tax laws vary; however, most states charge a borrower some sort of real estate tax in the mortgage loan transaction. The amount is included in the APR. Additionally, if property taxes are due on the property, they are included in the closing costs and APR.
  
  

Title Fees

• Rules vary state to state; however, a closing agent must be paid in a mortgage transaction. Title insurance must be provided and a basic title search must be conducted on any financed property. The title insurance company that conducts this research may close the mortgage transaction in some states; in others a real estate attorney is the closing agent. Regardless, the fees for the closing and the title work are included in the APR.