What is the difference between a mortgage interest rate and the APR on my loan estimate?

The interest rate is the cost of borrowing the principal, while the APR (annual percentage rate) folds in most upfront lender fees, points, and mortgage insurance to show the true yearly cost. Because APR spreads those fees over the full loan term, it is usually higher than the note rate and lets you compare offers on an apples-to-apples basis. The catch is that APR assumes you keep the loan for its entire term; if you plan to sell or refinance in a few years, a lower rate with higher fees may not pay off. Compare the APR across Loan Estimates from at least three lenders. The federal CFPB publishes a free Loan Estimate explainer at consumerfinance.gov.