How do closing costs impact the interest rate?

If you choose to finance your closing costs, the monthly loan payments will be higher than if you had paid the closing costs out-of-pocket. In order to help borrowers compare loans, lenders use a standard calculation called annual percentage rates (APR) which takes into account the closing costs. Use this calculator to itemize the closing costs and to compare loans with different rates, fees or terms.

Loan Information

Original Loan Amount

Term

Mortgage Rate

Traditional Closing Cost Information

Discount Points ?

Points paid upfront to buy down the stated rate; a bigger factor in the gap between rate and APR than most of the other fees combined.

Origination Fee

Advanced options 11

Lender Fees (processing/underwriting)

Credit Report

Appraisal

Title Insurance

Reconveyance Fee

Recording Fee

Wire and Courier Fees

Endorsement Fee

Title Closing Fee

Title Document Prep Fee

Other Fees

Enter your values and select Calculate.

The APR here is the number that reflects what your loan actually costs once closing fees are counted, and it will almost always sit above the stated mortgage rate you were quoted. There is no single 'correct' gap between the two — a larger gap simply means fees make up a bigger share of what you're borrowing, whether from points, origination charges, or the smaller line items like title insurance and recording fees.

The two levers that move this result the most are discount points and the origination fee, since both are priced as a percent of the loan amount and scale with it. Everything else — appraisal, credit report, wire fees, and so on — matters, but usually by tens of dollars rather than by a fraction of a percent.

The comparison between the two monthly payment figures shows the tradeoff of rolling costs into the loan versus paying them at closing: financing the fees raises the payment and the balance but keeps more cash in hand today. Neither figure accounts for property taxes, insurance, PMI, or how long you actually plan to keep the loan, all of which change whether points or upfront fees make sense for you.

It's worth rerunning this if your quoted rate changes, if a lender adjusts the fee schedule, or if you're deciding between paying points and taking a higher rate. Bringing the APR and fee totals to a lender or advisor for a side-by-side comparison is a reasonable next step — having these numbers in hand already puts you ahead of most borrowers who only look at the headline rate.

This information may help you analyze your financial needs. It is based on information and assumptions provided by you regarding your goals, expectations and financial situation. The calculations do not infer that the company assumes any fiduciary duties. The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy. Hypothetical illustrations may provide historical or current performance information. Past performance does not guarantee nor indicate future results.