What is the difference between A.P.R. and interest rate?
The APR (annual percentage rate) reflects the cost of your mortgage loan as a yearly rate. It also incorporates the fees incurred to obtain the loan, such as discount points and loan origination fee. The interest rate is the rate which is charged or paid for the use of money. An interest rate is often expressed as an annual percentage of the principal. It is calculated by dividing the amount of interest by the amount of principal.
The APR, or Annual Percentage Rate, is often higher than the quoted interest rate, or note rate. This is because the APR includes, in addition to interest, some of the additional costs of obtaining your financing. Simply stated, if there were no costs in obtaining financing, your note rate and your APR would be the same.
The APR (annual percentage rate) reflects the cost of your mortgage loan as a yearly rate. It also incorporates the cost to obtain the loan, such as: discount fees, loan origination fee, prepaid interest, and mortgage insurance, if required. The APR allows you to compare, in addition to the interest rate, the total cost of financing your loan, among various lenders. The interest rate is the actual note rate.
