Annual percentage rate
APRWhat is annual percentage rate?
APR expresses the cost of a loan as a yearly rate that includes both the interest rate and most lender fees. It is designed to make offers with different fee structures comparable.
What it means in practice
The note rate determines your payment. APR determines the true cost, because it folds in origination fees, discount points and other finance charges.
APR assumes you keep the loan for its full term — the exact assumption this calculator exists to question. Use APR to compare one Loan Estimate against another. For the refinance-or-not decision, the measure that matters is total cost over the years you actually expect to stay, which is what this tool computes. Refi Compass deliberately does not display an APR of its own: it does not collect the fee breakdown Regulation Z requires, so any figure it produced would diverge from the one on your Loan Estimate.
APR calculations are standardized under Regulation Z, but lenders differ in which fees they include, so compare Loan Estimates rather than advertised APRs.