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What is the Difference Between Interest Rate and APR?

April 26, 2017Apr Interest rate

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What is the Difference Between Interest Rate and APR?

3 Answers

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The interest rate is the cost to borrow the money disbursed in the loan.

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The interest rate is the cost to borrow the lender’s money. The APR (Annual Percentage Rate) represents the total cost of the mortgage over the life of the loan, including closing costs and lender points. Huc, please link “APR” to its description above. Thanks!

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The interest rate determines the calculation of your monthly payment of principal and interest. The APR takes into account the interest rate plus closing costs and points, amortized over the life of the loan. It is important to note that the APR can be deceiving, as not all of the fees charged by many lenders are factored into the APR. In order to accurately compare rates, a better question to ask is, “What is my interest rate and what are my closing costs?