Rates & interest
APR (Annual Percentage Rate)
The yearly cost of a mortgage as a percentage, folding in the interest rate plus certain lender fees and points. APR is usually higher than the note rate and is the best single figure for comparing offers.
What does APR mean?
Two loans can share the same note rate yet cost very differently once points and lender fees are counted — and that's what APR captures. By rolling those upfront costs into one yearly percentage, APR lets you compare Michigan lenders on a like-for-like basis. Watch for a wide gap between rate and APR: it signals a fee-heavy loan. APR assumes you keep the loan to term, so if you expect to move or refinance early, weigh the upfront cost separately from the APR.
Common questions
Is APR the same as the interest rate?
No. The interest rate sets your principal-and-interest payment; APR folds in points and certain lender fees to show the true yearly cost. APR is almost always higher than the note rate.
Why is my APR so much higher than my rate?
A wide gap signals a fee-heavy loan — lots of points or origination charges baked in. Comparing APRs across Michigan lenders exposes which quote is genuinely cheaper.
Should I always pick the lowest APR?
Usually, but not if you'll move or refinance soon. APR assumes you keep the loan to term, so upfront-fee-heavy loans look worse on APR than they'd cost over a short hold.
Related terms