Annual Percentage Rate (APR) - The APR is a calculation based on a standardized government formula designed to reflect the true annual cost of borrowing, expressed as a percentage.

It includes the interest, points, mortgage insurance, and other fees. The rate is also adjusted for the time value of money, so that money paid by the borrower early are more heavily weighted than those paid later. Additionally, APR is calculated assuming that the loan is not paid off early, therefore it potentially understates the borrower's true interest rate if she refinances, sells, or otherwise pays off the loan berfore the end of its original term.