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- using apr
Comparing advertised rates
To help homebuyers understand the total cost of a lender's advertised mortgage rates, the law requires lenders to advertise the "annual percentage rate" or APR of their loans.
- APR measures both the interest charged on a loan, as well as any other costs and expenses associated with the loan such as discount points or lender origination fees.
- Because APR is designed to show you the total cost of a loan, it can be useful when comparing loans from different lenders.
For example, a lender may be advertising a lower nominal or "basic" interest rate than its competitors, yet the total cost of the loan could be the same or even higher once you factor in fees and expenses. Comparing the APRs of two different lenders on the same type of loan, such as a 30-year fixed mortgage, will help you make more of an "apples-to-apples" comparison.
