What does APR stand for in mortgage lending?

The term APR stands for Annual Percentage Rate in mortgage lending. The APR is a critical figure because it represents the total cost of borrowing on a loan, expressed as an interest rate. It includes not only the interest charged on the principal amount of the loan but also any additional costs associated with obtaining the loan, such as origination fees, closing costs, and any other charges that a borrower may incur. This comprehensive rate allows borrowers to compare different loan offers more effectively, as it provides a standardized measure of borrowing costs that considers both the interest rate and additional fees over the life of the loan.

Understanding APR is vital for consumers as it affects how much they pay over the course of the loan and can influence their decision when choosing between different lending options. By focusing on the APR, borrowers can better assess the long-term financial implications of a mortgage, rather than just looking at the nominal interest rate. This makes the Annual Percentage Rate a key concept in mortgage lending, aiding in informed financial decision-making.