When shopping for a mortgage, you may notice the terms “APR” and “interest rate.” By law, it is a requirement for lenders to advertise both the interest rate offered as well as the APR.
Since the APR and interest rate serve similar functions, it is easy to confuse the two terms. However, buyers should be aware of a few differences between the two.
What is an Interest Rate?
Interest rates are the costs buyers will pay yearly to borrow money from a lender. There are two types of mortgage interest rates, fixed and variable. Fixed mortgage interest rates mean the interest rate will stay the same throughout the loan. Variable mortgage interest rates mean that the interest rate might change depending on the market rates.
What is APR?
APR stands for “annual percentage rate.” The APR includes the interest rate and additional fees, such as prepaid interest, private mortgage interest, closing costs, mortgage points, and other fees.
Why are there Differences Between Interest Rates Quoted Online?
The Federal Reserve typically determines the interest rate, while the APR will vary from lender to lender.
The APR is a calculation to include the lender’s fees, such as points and broker fees, to arrive at the actual cost of the loan in the form of a yearly rate. Lenders must show both rates to give buyers an idea of the lenders’ fees and interest rates.
Mortgage lenders choose what they include in APR, resulting in the difference between online quotes. Therefore, it is essential to know what fees lenders include to compare APRs accurately.
Related: 8 Reasons for Differences in Interest Rate Quotes
Marimark Mortgage
Marimark Mortgage is based in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in mortgages for first-time homebuyers, conventional home mortgages, refinance loans, reverse mortgages, and FHA, VA, and USDA mortgage options. In addition, we’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.
To get started with a mortgage to buy your next home, please fill out our Quick Mortgage Application or contact us.

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