What's the Difference Between Interest Rate and APR? | Mortgage FAQs

One of the most confusing parts about the mortgage interest rate is the difference between the base interest rate and the APR. APR stands for “annual percentage rate”. The APR contains both the mortgage rate and fees charged by the lender, while the rate is simply the base mortgage interest rate. The APR may contain broker fees, points (the tradeoff of rate in exchange for up-front fees), mortgage insurance, and more. This APR is disclosed by all lenders in the Loan Estimate. The APR gives you a better idea of the total cost of a mortgage, especially when comparing loan programs, like FHA or Conventional.