The Annualized Percentage Rate (APR) includes both the interest rate and various loan costs, such as closing costs and other expenses. For instance, if a borrower secures a 6% interest rate on their mortgage and faces additional costs of $5,000 for a rate buydown and $5,000 for loan expenses, these expenses totaling $10,000 are added to the interest rate to determine the APR.

It is important to be cautious about hidden fees, especially when lenders offer enticingly low-interest rates. Such low rates may be misleading, as they might be accompanied by undisclosed fees that significantly increase the overall cost of the mortgage. To avoid such surprises, it is vital to carefully review loan estimates and work with a trustworthy Bison Ventures loan officer who can guide prospective homebuyers through the process and provide clarity on all associated costs. By doing so, borrowers can make well-informed decisions and avoid potential financial pitfalls during the mortgage application process.