What Is The Difference Between Interest Rate and Annual Percentage Rate (APR)
The Annual Percentage Rate (APR) differs from interest in that it is a yearly rate that takes into account not only interest on the loan, but also mortgage insurance, and certain closing costs — including points paid at closing. Consequently, APR is likely to be higher than a loan’s interest rate. The APR is important because it allows homebuyers to more accurately compare different types of mortgages based on the annual cost for each loan.
