The process of shopping for the best offer on a mortgage for refinancing or purchasing can be overwhelming. Consumers tend to focus strictly on the offered interest rate by a lender and often overlook the mortgage APR because they don't understand how this works or the lender does not offer to explain this properly. The APR, stands for annual percentage rate and takes into consideration the up front cost associated with obtaining the mortgage, calculated over the life of a loan. Typically, this will measure the lenders fees and required third party closing fees to provide insight into the expected rate you would pay to borrow the money including the fees. If you have a loan that has zero closing fees from a lender and no third party fees than your apr would equal your interest rate. Consumers should always review the cost required to obtain the rate in order to determine which loan offers the best value and rate of return. If you are shopping for an adjustable rate mortgage, the apr will be less useful as it typically will be lower than the actual rate, in this scenario an itemized list of your closing fees will be necessary for comparison purposes.

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