Annual Percentage Rate (APR)

Terminology Tip

Calculator with word mortgage on the screen
The APR is an interest rate reflecting the total cost of a mortgage for a whole year (annualized), rather than just the contract rate.

The APR includes all loan costs, such as origination and processing fees, in addition to the interest rate, allowing the borrower to compare different types of mortgages base on the annual cost for each loan. Look for the APR in the written loan estimate, which will show a line-by-line estimate of fees.