The yearly interest percentage of a loan, as expressed by the actual rate of interest paid, including up-front loan fees. The interest rate on a mortgage loan, sometimes called the note rate, is the percentage the lender charges you to borrow the principal amount of the loan. This rate is used to calculate your monthly principal and interest payment, and it does not include most fees or upfront costs associated with getting the loan. When people talk about a mortgage having a certain rate, they are usually referring to this interest rate, since it directly affects what you pay each month for the loan itself.
The APR, or annual percentage rate, is a broader measure of the total cost of borrowing because it includes not only the interest rate but also certain loan-related fees such as origination charges, discount points, and some closing costs. APR converts those costs into an annualized percentage so you can more easily compare loans that may have different fee structures. Because it includes these added costs, APR is usually higher than the interest rate, and it is most useful when comparing loans with the same term length. However, it assumes you keep the loan for a long time, so if you sell or refinance early, the APR may not reflect your actual cost as accurately.
