MORTGAGE GLOSSARY
What Is APR?
The short definition
APR (annual percentage rate) is the interest rate on your loan plus most of the lender's fees, expressed as a single yearly percentage. It's meant to give you one number that reflects the full cost of borrowing, not just the rate.
Why it's different from the interest rate
The interest rate is what you're charged on the loan balance. APR adds in most origination fees, discount points, and some other closing costs, then spreads that cost over the life of the loan as a percentage. That's why APR is almost always a bit higher than the interest rate on the same loan.
Why it matters
Two lenders can quote the same interest rate but charge very different fees. Comparing APRs, not just rates, gives a more apples-to-apples view of which offer actually costs less.
.svg)
.svg){kind=small}
.svg){kind=small}
.svg){kind=small}
.svg){kind=small}