What is the difference between Interest Rate & APR?
Interest Rate – The interest rate is the cost of borrowing the principal loan amount. It can be variable or fixed, but it’s always expressed as a percentage.
Annual Percentage Rate (APR) – The cost of credit on a yearly basis, expressed as a percentage. Required to be disclosed by the lender under the federal Truth in Lending Act, Regulation Z. Includes up-front costs paid to obtain the loan, and is, therefore, usually a higher amount than the interest rate stipulated in the mortgage note. Does not include title insurance, appraisal, and credit report.
Additional Mortgage FAQs
- How does an escrow account work?
- What are Discount Points (or Points)?
- What are the common fees through the mortgage process?
- What are the steps in the Mortgage Process?
- What is a Loan To Value Ratio (LTV)?
- What is a Rate Lock or Lock In?
- What is a Truth-in-Lending Disclosure and why do I receive it?
- What is Private Mortgage Insurance (PMI)?
- What is the difference between a Mortgage Broker & Mortgage Banker?
- What is the difference between Interest Rate & APR?