Interest Rate vs. APR
When comparing mortgage options, the interest rate is only part of the story.
Interest Rate
Your interest rate determines the amount of interest you'll pay on your mortgage balance. A lower rate can mean a lower monthly principal and interest payment—but it doesn't tell you the full cost of the loan.
APR (Annual Percentage Rate)
APR gives you a broader picture of the annual cost of borrowing. It generally reflects the interest rate plus certain lender and third-party fees and finance charges associated with the loan.
Why Does APR Matter?
Two loans can have the same interest rate but different APRs because their fees and costs may differ. Looking at both the rate and APR can help you make a more informed comparison between loan options.
Don't shop for a mortgage based on rate alone. Understand the rate, APR, fees, and overall loan costs so you can choose a mortgage that fits your financial goals.
This information is provided for general educational purposes only and is not a commitment to lend, an offer of credit, or individualized financial advice. Loan programs, eligibility requirements, interest rates, terms, fees, mortgage insurance, and guidelines are subject to change and may vary by borrower, property, lender, and loan program. All loans are subject to applicable underwriting, credit, income, asset, and property requirements.