APR (Annual Percentage Rate)
The yearly cost of a loan, expressed as a percentage that includes interest plus mandatory fees.
Also called: annual percentage rate
APR is meant to let you compare loans on a single number. It bundles the interest rate with the up-front and recurring fees the lender requires (origination, broker, mortgage insurance, etc.), then expresses that total as an annualized percentage of the loan amount.
APR is not the same as the monthly compounding rate that produces your payment. A 30-year mortgage at 6.50% interest with 2 points of fees might quote a 6.79% APR. Your monthly payment is computed from 6.50%, but the APR is the lever you should use when comparing two lenders' offers.
Beware: APR assumes you keep the loan to maturity. If you'll refinance or sell within a few years, the up-front fees weigh more heavily than APR suggests.