Example
Lender A: lower advertised interest rate, but high points and fees.
Lender B: slightly higher interest rate, but lower upfront costs.
APR helps provide additional context.
APR Still Doesn't Tell You Everything
APR is useful. But also compare:
- Cash to close
- Points
- Lender credits
- Monthly payment
- Loan type
- Mortgage insurance
- How long you expect to keep the loan
Why Holding Period Matters
A loan with expensive upfront points may have attractive long-term economics but poor economics if you refinance quickly.
Use the points break-even calculator to compare the timing.
