Mortgage interest rates vs. APR
The interest rate is the cost of borrowing the principal loan amount. The interest rate does not reflect fees or any other charges you may need to pay for the loan. The Annual Percentage Rate (APR) represents the true yearly cost of your loan. It includes the actual interest you pay to the lender, plus any fees or costs. That’s why a mortgage APR is typically higher than the interest rate – and why it’s such an important number to know when comparing loan offers.
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