📉 Mortgage Rate vs. APR: They're Not the Same Number

When buyers compare mortgage quotes, they naturally look for the lowest interest rate. That's important—but there's another number worth looking at too: APR.

🏦 Your mortgage interest rate represents the annual cost of borrowing the money itself. APR, or Annual Percentage Rate, is broader because it incorporates the interest rate along with certain other costs of getting the loan, such as points, mortgage broker fees and other applicable charges. That's why APR is normally higher than the advertised interest rate.

For example, two lenders could theoretically quote similar interest rates while charging very different upfront costs. Simply seeing “6.25%” on both proposals wouldn't tell you the entire story. Your Loan Estimate shows the interest rate on Page 1 and APR in the comparison section on Page 3, making it easier to compare offers. 📋

💡 APR isn't a magic number that automatically tells you which mortgage is best, either. Loan type, points, expected time in the home, closing costs and other terms still matter. CFPB specifically warns that comparing APRs between fixed and adjustable-rate mortgages requires additional care.

The takeaway: don't rate-shop with only one number. Ask lenders to explain both the rate and the costs required to obtain it.

📩 Getting ready to buy and unsure how all the financing numbers fit together? To talk with one of our agents, fill out the Contact Us form located at the bottom of our page, at mycoreteam.pro.