Legal Definitions
Legal Definitions » A » Annual Percentage Rate Law & Legal Definition

Annual Percentage Rate Law & Legal Definition

Related to Annual Percentage Rate

Annual percentage rate (APR)is theannual cost of credit expressed as a percentage. The Federal Truth and Lending Law requires lenders to disclose the true annual interest on consumer sales, as well as the total dollar cost and other terms of a loan. It is commonly used to compare loan programs from different lenders.

The following fees are generally included in the APR:

  • Points - both discount points and origination points
  • Pre-paid interest. The interest paid from the date the loan closes to the end of the month. Most mortgage companies assume 15 days of interest in their calculations. However, companies may use any number between 1 and 30!
  • Loan-processing fee
  • Underwriting fee
  • Document-preparation fee
  • Private mortgage-insurance

The following fees may be included in the APR:

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

The following fees are normally not included in the APR:

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





Get a Term Defined


Read a Law Digest

  • Need to read the law or find an answer to a legal question? Visit our Law Digest for the largest selection of law digests and answers available.
    Go to Law Digest

Form Packages


Annual Percentage Rate Legal Forms

Legal Life

Form Drafting

  • Can′t find the form you need, or need a form we offer revised for your situation? Submit your request and our attorneys will review the request and let you know if the form can be provided.
    Submit a drafting request...
Legal Forms Home

Copyright 1996-2008 USLegal, Inc. - All Rights Reserved.