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Why is the Annual Percentage Rate (APR) different from the interest rate?

The APR is a rate that reflects the total cost of your mortgage loan expressed in terms of an annual interest rate. The APR reflects factors including the interest rate on your mortgage loan, the term of the loan, and the other applicable costs of financing such as points, fees and certain closing costs. Your monthly payment is calculated based on the mortgage note rate, not the APR. The APR will be higher than your interest rate, especially if you are paying any points.

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