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What does APR mean?

In commercial real estate lending, APR stands for “annual percentage rate.” It is a measure of the total cost of borrowing money, expressed as a percentage of the loan amount. The APR includes both the interest rate charged on the loan and any fees or charges associated with the loan, such as origination fees, points, and closing costs.

The APR is designed to give borrowers a clear understanding of the total cost of a loan, which can help them compare different loan offers and choose the one that best meets their needs. In general, a lower APR indicates a lower total cost of borrowing, while a higher APR indicates a higher total cost of borrowing.

It’s important to note that the APR may not always be an accurate measure of the true cost of borrowing, as it does not take into account factors such as prepayment penalties or changes in interest rates over the life of the loan. Therefore, borrowers should carefully review all loan documents and work with a knowledgeable lender to fully understand the costs associated with a commercial real estate loan.

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