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APR (Annual Percentage Rate)
The annualized cost of a loan including interest and fees, expressed as a percentage.
Definition
The Annual Percentage Rate reflects the true yearly cost of borrowing by combining the interest rate with lender fees, mortgage insurance, and certain closing costs. APR is always equal to or higher than the note rate because it factors in upfront costs spread over the loan term. Federal law requires lenders to disclose APR so borrowers can compare offers on an apples-to-apples basis. A loan with a lower rate but higher fees can actually have a higher APR than a slightly higher-rate loan with minimal fees. When comparing DSCR loan quotes, APR is one of the best single numbers for evaluating total cost.
How This Relates to DSCR Loans
DSCR loans often carry higher APRs than conventional mortgages. Comparing APRs across lenders helps you find the best overall deal.
Related Terms
Interest Rate
The percentage charged by a lender for borrowing money, applied to the outstanding loan balance.
Points (Discount Points)
Upfront fees paid to the lender to reduce the interest rate, where one point equals 1% of the loan amount.
Origination Fee
A fee charged by a lender or broker for processing and underwriting a new loan.
Closing Costs
Fees and expenses paid at the closing of a real estate transaction beyond the purchase price.
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