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What is the difference between an interest rate and an annual percentage rate (APR)?

April 26, 2017Annual Percentage Rate Apr difference Interest rate

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What is the difference between an interest rate and an annual percentage rate (APR)?

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An interest rate is the monthly cost you pay on the unpaid balance of your home loan. An annual percentage rate (APR) includes both your interest rate and any additional costs or prepaid finance charges such as points, origination fee, private mortgage insurance and underwriting and processing fees. (Your actual fees may not include all of the items above.) The APR is a universal measurement that will help you compare the cost of mortgage loans offered by different mortgage lenders.