The annual percentage rate is the total yearly cost of borrowing, including interest and fees, expressed as a percentage. APR gives you a more complete picture of loan cost than the interest rate alone.
When you compare mortgage offers, the interest rate only tells part of the story. APR includes lender fees, discount points, mortgage insurance, and other charges rolled into one number. This makes it easier to compare loans from different lenders on equal footing.
For example, a loan with a 6.5% interest rate and high fees might have a 6.8% APR, while another loan at 6.75% with low fees might have a 6.85% APR. In that case, the first loan is actually cheaper overall despite the lower advertised rate.
Federal law requires lenders to disclose the APR alongside the interest rate so borrowers can make informed comparisons. When shopping for a refinance, always compare APRs rather than interest rates alone to understand the true cost of each offer.
A fixed-rate mortgage has an interest rate that stays the same for the entire loan term. Your principal and interest payment never changes, making it easier to budget.
Mortgage PointsMortgage points (also called discount points) are upfront fees you pay to the lender at closing in exchange for a lower interest rate. One point equals 1% of the loan amount.
Closing CostsClosing costs are the fees and expenses you pay when finalizing a mortgage, typically ranging from 2% to 5% of the loan amount. They include lender fees, appraisal costs, title insurance, and government recording charges.
See how this affects your refinance
Use real Federal Reserve data to calculate your potential savings.
Try the Refinance Calculator