Little Known Difference between Interest Rate and APR
Annette Bui| Updated March 21, 2019 | Mortgage Programs 101
One of the first things consumers want to know is what is the interest rate? When comparing lenders and finding out which loan product works best for you. One of the most important factors is to look at what the Interest rate as well as the APR or annual percentage rate. While both figures will express how much you are paying on the loan, they do not mean the same thing. The interest rate is the cost for the principal amount borrowed on your mortgage loan. This can be either fixed for 15, 20 or 30 year term.
The APR, short for annual percentage rate tells you the total cost of financing your loan including any fees, discount costs that are financed into the loan. This means, when you see an advertised rate and the APR is higher than the interest rate that you are paying costs that are added to your loan. Thus it is very important when comparing loan options to know what both of these figures are.