What is the difference between a mortgage interest rate vs APR?

Interest Rate vs APR

What is the difference between a mortgage interest rate vs APR?

The Mortgage Minute is weekly informational series presented by Laura Borja, Your San Diego home loan expert.Interest rate vs apr

In this week’s The Mortgage Minute we will take a look at the difference between an interest rate vs APR.


Loan EstimateIf you’ve ever gone to a real estate transaction or even looked at advertisements, I’m sure you noticed that both interest rate and APR are listed in the paperwork or the advertisement.

So what is the difference between the two?


Prefer video to reading? Then check out this video – https://youtu.be/jnmPLqBI8DQ

This is how their Consumer Finance Protection Bureau, the agency that oversees lending in the U.S., describes the difference between an interest rate vs APR.


CFPB explains interest rate vs apr

Essentially the interest rate is what determines the repayment payment of the loan and how much interest you paid during the life of that loan.

The APR on the other hand, includes both the interest as well as certain costs which are then factored into the calculation.
Most the time, your APR is going to be higher than your interest rate.
The difference between interest rate vs APR is even more drastic if you have a loan that has mortgage like an FHA or conventional loan. The same applies for VA loans and USDA loans that have an upfront funding fee.

Mortgage CalculatorDoes the APR affect your payment?

NO it does not.
Your mortgage payment is calculated based on:

  • starting amount of your loan
  • the term of repayment
  • your interest.





So, there you have it. A quick look at the difference between  interest rate vs APR.

If you have any questions about this or any other mortgage related topic, by all means, feel free to contact me.
Send me an email
Give me a call = (858) 3-LOAN-SD (356-2673)
or shoot me a text at that same number
And of course, you can always find me on social media as well.


Thanks for checking out this week’s The Mortgage Minute, don’t forget to subscribe, and I will see you next week.

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