What is an annual percentage rate
on a New Jersey mortgage?

The annual percentage rate, or APR, is a broader measure of what a mortgage costs than the interest rate alone. The interest rate is what you pay each year to borrow the money. The APR adds in points, mortgage broker fees and other charges you pay to get the loan, so it is usually higher than the rate. You will find the APR on the Loan Estimate a lender sends you.

On a Loan Estimate, the interest rate is on page 1 under Loan Terms and the APR is on page 3 under Comparisons. Setting two lenders' APRs side by side can show when a lower rate comes with higher fees. The Consumer Financial Protection Bureau cautions against looking at APR alone. Take extra care comparing a fixed-rate loan with an adjustable one. An adjustable loan's APR does not show the highest rate the loan could reach.

For example, say a buyer in Gloucester County gets Loan Estimates from two lenders. One quotes the lower interest rate but charges points, and its APR comes out higher than the other lender's. Before choosing one, the buyer calls both lenders to find out what makes up the difference.

Questions about rates, points and fees go to your lender, who can walk you through each Loan Estimate. Your agent can help you keep track of the dates in your contract, including closing, while your lender works on the loan.