These days a 3 year APR calculation is a more likely reality for most people than keeping their mortgage for all thirty years.

Here is how to perform this unofficial but incredible valuable calculation using your financial calculator to demonstrate your expertise to your customers...

Using yesterday's example of a $200,000, 30 year loan at 6.5% with $5,000 in closing costs, take the closing costs and divide them by the number of months the loan will be outstanding or in this case 36 months.

$5000 divided by 36 months equals $138.89 per month. Add the $138.89 to the P&I payment of $1264.14 and recalculate the interest rate based on the full amount of the loan of $200,000. You will then find the real APR is now a significantly higher 7.53%. Shorten the loan life to two years and your real APR is now a robust 8.04%!

Also, keep in mind that this calculation does not account for the time value of money so the real APR is still slightly understated but much more accurate than the 30 year calculation.

Understanding these numbers and showing them to your customers will set you up for success especially in times like these of higher interest rates. Because while interest rates are important, in the end the best mortgage plan is the one that costs the least during the time that the mortgage is outstanding.