As someone looking to buy a home, you may have come across the terms interest rate and APR. While they may sound similar, there are significant differences between the two. Understanding these differences is crucial in making informed decisions with a real estate agent when shopping for a mortgage. Here's what you should know about the differences between the interest rate and APR. 

Interest Rate 

The interest rate is the cost of borrowing money, expressed as a percentage of the loan amount. It is the amount of interest that you will pay on the loan over the life of the loan. The interest rate is a crucial factor in determining your monthly mortgage payments. The higher the interest rate, the higher your monthly payments will be.

APR 

The Annual Percentage Rate (APR) is a comprehensive measure of the total cost of borrowing, including the interest rate and other fees such as origination fees, discount points, and closing costs. APR is expressed as a percentage and is calculated based on the amount of the loan and the total cost of borrowing over the life of the loan. This gives you a more accurate picture of the total cost of borrowing than the interest rate alone and allows you to compare the cost of different mortgage options from different lenders. When comparing mortgage options, you should look for the APR rather than the interest rate alone. 

The APR and interest rate are both important factors to consider when shopping for a mortgage. If you are looking for a reliable real estate agent to help you find your dream home, look no further than Greenways Real Estate & Auction in Convington, VA. Our team of experienced real estate agents can guide you through the home buying process and help you find the perfect mortgage option for your needs. For more information about our real estate listings, browse available properties online, text LISTING to (540) 698-0883, or call (540) 962-1155 to speak with a representative. We also have an app available on all smart devices to help make your search more convenient.