APR vs Interest Rate: What New Hampshire Borrowers Need to Know

New Hampshire borrowers often focus on advertised interest rates while ignoring APR—the metric that reveals true borrowing costs by including lender fees.

What APR Includes

APR (Annual Percentage Rate) accounts for:

• Base interest rate: The note rate you pay monthly
• Origination fees: Points, underwriting, processing charges
• Broker compensation: If using a mortgage broker
• Certain closing costs: Some lender-imposed fees (not third-party title/escrow)

APR does not include:

• Title insurance, attorney fees, recording charges
• Homeowners insurance, property taxes, HOA dues
• Appraisal, credit report, or inspection fees

New Hampshire APR Example

Compare these two Portsmouth lender quotes on a $450,000 purchase:

Lender A:

• Rate: 6.500%
• Origination fee: $3,000
• APR: 6.668%

Lender B:

• Rate: 6.625%
• Origination fee: $1,000
• APR: 6.701%

Despite Lender A’s lower rate, Lender B costs less if you hold the loan 5+ years:

• Year 1 difference: Lender A saves ~$300 in interest but costs $2,000 more in fees = $1,700 worse
• Year 5 cumulative: Lender A still behind by ~$1,200
• Year 7 cumulative: Break-even point
• Year 10+: Lender A pulls ahead

Most New Hampshire borrowers refinance or move within 7 years—making Lender B the better deal despite the higher rate.

Common APR Tricks in New Hampshire

Watch for these in Manchester, Nashua, or statewide markets:

1. “No Fee” Loans at Higher Rates

Some lenders advertise “zero fees” by inflating the rate enough to cover origination costs via lender credits:

• Base market rate: 6.500%
• “No fee” rate: 7.000% (0.500% higher)
• Value of lender credit: ~$4,500 on $450k loan

This works if you plan to refinance within 3 years—but costs more long-term than paying modest fees upfront.

2. Discount Points Manipulation

Some quotes show “low rates” by including discount points (prepaid interest):

• Rate: 6.250% with 1.5 points ($6,750 on $450k)
• APR: 6.524%

Compare to a no-point option at 6.500%/6.568% APR—the point-buy often doesn’t pay off unless you hold the loan 8+ years.

3. Hiding Fees in APR Disclosure

Lenders must disclose APR, but some bury high fees in fine print:

• Advertised rate: 6.375%
• Origination fee: $2,500
• “Processing fee”: $1,200
• “Underwriting fee”: $900
• Total fees: $4,600 (APR jumps to 6.662%)

Always ask for itemized Loan Estimate rather than trusting advertised APR.

New Hampshire Regional APR Variations

Fee structures vary across NH markets:

Portsmouth/Seacoast:

• More lender competition = lower typical fees ($1,000–$2,000)
• Credit unions often have lowest APR

Manchester/Concord:

• Moderate fee range ($1,500–$2,500)
• Brokers provide good wholesale access

Northern/Lakes Region:

• Fewer local lenders = potentially higher fees ($2,000–$3,000)
• Brokers especially valuable for accessing competitive APR

How to Compare APR Correctly

Follow this process when evaluating New Hampshire lenders:

1. Get Loan Estimates from 3–5 lenders (banks, brokers, credit unions)

2. Compare APR on identical loan amounts ($450k vs $450k, not $450k vs $455k)

3. Verify APR includes all lender fees (ask “are there any fees not included in this APR?”)

4. Consider your time horizon:

   • Refinance within 3–5 years: Accept higher rate for lower fees
   • Keep loan 7+ years: Pay modest points for lower rate
   • Unsure: Split the difference with mid-range fees/rate

5. Check rate lock terms: 30-day, 45-day, or 60-day locks have different pricing

NH Credit Union APR Advantage

New Hampshire credit unions often offer lowest APR due to non-profit structure:

• Service Credit Union (Portsmouth)
• St. Mary’s Bank (Manchester)
• Granite State Credit Union (statewide)

Typical APR advantage: 0.10%–0.25% below bank/broker pricing on conventional loans.

When APR Doesn’t Matter

APR comparison is less useful for:

• ARM loans: APR calculation assumes worst-case rate adjustments (unrealistic)
• Temporary financing: If you know you’ll refinance within 1–2 years
• Non-QM loans: High fees for portfolio underwriting can inflate APR despite competitive rates

For these scenarios, focus on total out-of-pocket costs rather than APR.

New Hampshire APR Tracking

Ask every lender:

1. “What’s the APR on this loan?”
2. “What fees are included in the APR calculation?”
3. “Are there any lender fees not reflected in APR?”
4. “Can you provide a Loan Estimate for comparison?”

Use APR as the primary comparison metric across New Hampshire lenders, and you’ll avoid overpaying thousands in hidden fees disguised by attractive advertised rates.