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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Marje/Getty Images October 18, 2022 Checkmark Bankrate logo How is this page expert verified? At Bankrate, we take the accuracy of our content seriously. "Expert verified" means that our Financial Review Board thoroughly evaluated the article for accuracy and clarity. The Review Board comprises a panel of financial experts whose objective is to ensure that our content is always objective and balanced. Their reviews hold us accountable for publishing high-quality and trustworthy content. Jennifer Bradley Franklin is a multi-platform journalist and author, often covering finance, real estate and more. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our mortgage reporters and editors focus on the points consumers care about most — the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more — so you can feel confident when you make decisions as a homebuyer and a homeowner. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. When you’re , sometimes it can feel like mortgage lenders and brokers are speaking a different language. If you’re shopping for a mortgage, you’ll likely come across the term APR, which stands for annual percentage rate, an important concept to understand before you commit to a home loan. Here’s what you need to know. What is the APR on a mortgage
When referring to the rate on a mortgage, it’s easy to confuse the , but they aren’t the same thing. The APR reflects the interest rate and all other fees, such as an and . For the most accurate comparison between two mortgage offers, the APR will give you a much better idea than the interest rate of how much each will cost overall. “The APR helps the borrower evaluate the true all-in cost of their mortgage,” says Nilay Gandhi, senior wealth advisor with Vanguard Personal Advisor Services in Philadelphia. Because the APR factors in costs beyond just the interest rate, it’s smart to pay attention to every expense to get the best overall rate for your mortgage. Small changes in the APR can have a big impact on the total amount you’ll pay for your home over time. To sum it up, “the higher the APR, the more you’ll pay, everything else being equal,” says Gandhi. APR examples
Many lenders advertise the APR for their loan products, which can help you more accurately and costs. You can also calculate the APR with Bankrate’s by inputting the loan information and receive a full , either by year or by month. Once you , have your loan officer walk you through different APR scenarios so you can make an informed decision. For example: APR with fee and no points APR with fee and 1 point APR with fee and 2 points Amount borrowed $310,000 $310,000 $310,000 Interest rate 6.5% 6.5% 6.5% Loan term 30 years 30 years 30 years Origination fee (1% of amount borrowed) $3,100 $3,100 $3,100 Points (1% of amount borrowed) $0 $3,100 $6,200 APR 6.596% 6.691% 6.787% What s a good APR on a mortgage
The mortgage market changes on a daily basis, so a “good” APR one day might not be so good the next. Currently, are increasing, so if you’re ready to buy a home, now might be the best time to . Keep an eye on rates so you understand how they fluctuate, longer-term trends and what’s considered a fair rate. Bankrate’s mortgage rate tables can help. Bottom line
When you’re , lenders consider a variety of factors, including your , employment, income, debt, assets and , to help them determine what interest rate to offer you. To , shop around. “Credit unions, for example, are a great place to start, as they often have lower fees in comparison to banks, which can result in a lower APR,” says Gandhi. If you can handle a higher monthly mortgage payment, consider a shorter loan term, such as 15 years instead of 30, which will cost you less in the long run. However, make sure your monthly mortgage payment fits comfortably within your budget. One way to keep it manageable is to make a 20 percent down payment. That keeps you from having to pay , which adds to your monthly costs. “I always encourage clients to pay attention to the all-in cost, which is often referred to as PITI (principal, interest, taxes and insurance),” says Gandhi. “Too often, individuals focus on their rate or just the principal and interest, but it’s important to focus on the total cost to ensure you can afford the payments.” SHARE: Jennifer Bradley Franklin is a multi-platform journalist and author, often covering finance, real estate and more. Suzanne De Vita is the mortgage editor for Bankrate, focusing on mortgage and real estate topics for homebuyers, homeowners, investors and renters. Kenneth Chavis IV is a senior wealth manager who provides comprehensive financial planning, investment management and tax planning services to business owners, equity compensated executives, engineers, medical doctors and entertainers. Related Articles