See the true cost of borrowing. APR includes your interest rate plus fees, giving you an apples-to-apples comparison between loan offers.
The interest rate is the cost of borrowing the principal. The APR (annual percentage rate) includes the interest rate plus fees like origination charges, discount points, and mortgage insurance. APR is always equal to or higher than the interest rate, and it's the number to use when comparing loan offers.
APR spreads one-time fees across the life of the loan. A $300,000 loan at 6.75% with $4,000 in total fees has an APR of about 6.92%. The fees increase your cost of borrowing.
Usually, but not always. If you'll sell or refinance within 5-7 years, a loan with higher fees (higher APR) but a lower rate could be cheaper short-term. Run the numbers with our refinance break-even calculator.
Each point costs 1% of the loan and lowers your rate by ~0.25%. Paying points makes sense if you'll keep the loan long enough to recoup the cost. Read our mortgage points guide for the full break-even math.