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Annual Percentage Rate (APR)
A tool used to compare loans across different loan programs is the Annual Percentage Rate (APR). Federal law requires mortgage lenders to disclose the APR on loan documents and when they advertise a rate. It is designed to represent the true cost of the loan to the borrower, expressed in the form of a yearly rate.
The APR won't tell you anything about balloon payments or how long your rate is locked for. You can use APRs as a guideline to shop for loans, but you should not depend solely on the APR in choosing which loan is best for your needs.