What does "APR" stand for in mortgage lending?

The term "APR" stands for Annual Percentage Rate. In mortgage lending, the APR is a crucial figure that represents the total cost of borrowing on a mortgage over a year. It includes not just the interest rate on the loan but also encompasses other costs such as mortgage insurance, closing costs, and any fees associated with the loan. By providing this comprehensive figure, consumers can more easily understand the true cost of a mortgage and compare different loan offers.

Using APR instead of just the nominal interest rate gives borrowers a clearer picture of how much they will actually end up paying, allowing for more informed decision-making when selecting a mortgage product. This is a key element in promoting transparency in lending practices, making it easier for consumers to compare loans effectively.