Annual Percentage Rate (APR)

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The Annual Percentage Rate (APR) is the total yearly cost of a mortgage expressed as a percentage, combining the interest rate with most upfront lender fees and certain closing costs.

Because it folds in charges like origination fees and discount points, the APR is usually a little higher than the quoted interest rate. It exists so borrowers can compare loan offers on an even footing. For example, a loan with a low interest rate but heavy fees may carry a higher APR than a loan with a slightly higher rate and fewer fees.

APR assumes you keep the loan for its full term, so if you plan to move or refinance early, the simple interest rate may matter more. You can estimate it with our APR calculator or model payments with the main calculator.

Related terms: Discount Points, Closing Costs