The total costs of obtaining a home mortgage are not simply related to the interest rate of the loan. The Annual Percentage Rate, also known as APR, is the yearly cost of a particular loan including interest, insurance and origination fees (points). APR is NOT the same as the interest rate of the loan.

When obtaining a mortgage, interest rates vary depending on the amount of origination fees (points) that are paid upfront by the borrower. A 4.0% interest mortgage may be available for a 0% origination fee, or the borrower could opt to pay a 1% origination fee to receive a 3.75% interest rate. APR is a calculation that incorporates both the upfront and ongoing mortgage costs so that a borrower can effectively compare two loans.