Understanding the apr calculator
The interest rate is only the cost of borrowing the principal; the APR (annual percentage rate) adds lender fees, points, and certain closing costs, then expresses the whole package as a single yearly rate. Because those upfront charges effectively reduce the money you receive while your payments stay the same, the APR is always at least as high as the note rate and it is the number to compare across loan offers.
APR has limits. It assumes you keep the loan for its full term, so it overstates the cost of fees if you sell or refinance early, and it doesn't capture every fee the same way across lenders. Still, when two mortgages advertise the same rate, the one with the lower APR is genuinely cheaper the gap is exactly the fees this calculator prices in.
Results are estimates for education only and are not financial advice.