The Differences Between APR and Interest Rate on Your St Louis Mortgage

Suburban HomeFirst time homebuyers ask me all of the time, “what does this mean?” A lot of them get into the process without knowing the basics about the industry. We thought we’d give you a list of some common terms that you’ll hear or see when you’re applying for your loan, and what they mean. Today we’ll discuss the differences between an interest rate and an APR (Annual Percentage Rate)


An annual percentage rate (APR) is a broader measure of the cost to you of borrowing money. The APR reflects not only the interest rate but also the points, mortgage broker fees, and other charges that you have to pay to get the loan. For that reason, your APR is usually higher than your interest rate.
These also include mortgage insurance premiums, but not other payments to third parties, such as payments to title insurers or appraisers. This lets you know exactly what you will pay monthly on your mortgage (you can use our mortgage calculator to see your payment!) We always go over these options with you so that you understand what you are signing.

Interest Rate

The interest rate is the cost you will pay each year to borrow the money, expressed as a percentage rate. It does not reflect fees or any other charges you may have to pay for the loan. You always want to find out what your APR is, because that is what actually shows your monthly payment more accurately. The interest rate is merely a part of the APR.

Next Steps

Hopefully, this will help you when you’re discussing your mortgage with your loan officer or mortgage company. If you want to deal with a mortgage company that will always show you all of your options before you sign, call The Home Loan Expert, Ryan Kelley, today. Call the office at (314)781-9700 or apply online at www.thehomeloanexpert.com today. Nobody makes it easier to refinance or purchase a new home than The Home Loan Expert, Ryan Kelley.

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