What does APR stand for in mortgage terms?

In mortgage terms, APR stands for Annual Percentage Rate. It is a critical metric used to express the total cost of borrowing over the life of a loan, which includes not only the interest rate but also any additional costs or fees associated with securing the mortgage. This comprehensive approach allows borrowers to understand the true cost of a loan on an annual basis, making it easier to compare different mortgage offers and choices.

The APR is particularly important because it reflects the total cost of financing, providing a clearer picture for consumers who are considering various loan products. Unlike simple interest rates, which may seem lower but do not take additional costs into account, the APR provides a more complete perspective, enhancing transparency in lending practices.

Understanding APR is essential for borrowers as it influences their decision-making process in selecting the most cost-effective mortgage that meets their financial situation and long-term goals.