Differences between mortgage interest rate and APR

What are the differences between mortgage interest rate and APR?
IT GuyNetwork EngineerAsked:
Who is Participating?

[Product update] Infrastructure Analysis Tool is now available with Business Accounts.Learn More

I wear a lot of hats...

"The solutions and answers provided on Experts Exchange have been extremely helpful to me over the last few years. I wear a lot of hats - Developer, Database Administrator, Help Desk, etc., so I know a lot of things but not a lot about one thing. Experts Exchange gives me answers from people who do know a lot about one thing, in a easy to use platform." -Todd S.

The Annual Percentage Rate [APR] can include other costs such as points and fees as well as the mortgage interest.  

The APR gives you a way of comparing the costs of different mortgage options.
mortgage rate is what the mortgage company says it is. Some have highly imaginaive ways of calculating it. (compounded monthly, daily, etc). To make comparisons easier , the APR (annual percentage rate) was devised. It is based on the total interest and fees paid in one year on the amount borrowed. The calculation can become complicated see https://www.thebalance.com/annual-percentage-rate-apr-315533
Juana VillaFront-end DeveloperCommented:
Summary from The difference between your mortgage rate and the annual percentage rate, or APR:

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.

is a broader measure of the cost of a mortgage because it reflects the interest rate plus other costs such as broker fees, discount points and some closing costs, expressed as a percentage."

The main difference is that the interest rate calculates what your actual monthly payment will be... The APR calculates the total cost of the loan.

Here it is a youtube video that might help you understand the concept better.

Experts Exchange Solution brought to you by

Your issues matter to us.

Facing a tech roadblock? Get the help and guidance you need from experienced professionals who care. Ask your question anytime, anywhere, with no hassle.

Start your 7-day free trial
It's more than this solution.Get answers and train to solve all your tech problems - anytime, anywhere.Try it for free Edge Out The Competitionfor your dream job with proven skills and certifications.Get started today Stand Outas the employee with proven skills.Start learning today for free Move Your Career Forwardwith certification training in the latest technologies.Start your trial today
credit card

From novice to tech pro — start learning today.