#### Definition:

This tutorial helps you to calculate effective annual interest rate (APR) on a mortgage loan.

#### Formula:

L - F = P_{1}/(1 + i) + P_{2}/(1 + i)^{2} + P_{3}/(1 + i)^{3} +...
** Where, **
i = IRR
L = Loan amount
F = Points and all other lender fees
P = Monthly payment
#### Example:

Assume the loan amount is 100,000 term 30 years, rate 7%, and closing cost 2,000. The last consists of all lender charges, but not charges for appraisal, credit or other third party services.

#### Given,

Loan Amount (L) = 100000

Rate of Interest (R) = 7% = 0.07

Number of Period (N) = 30 years

Total Closing Costs (F) = 2000

Number of Points Paid = 0

#### Solution:

#### Result:

Mortgage APR is 7.24 %