APR (Annual Percentage Rate) is a standardized way of comparing mortgage offers because it bakes in not just the interest rate but also lender fees, mortgage insurance, and discount points.

Federal law requires lenders to disclose APR alongside the interest rate so borrowers can compare loans on equal footing. A loan with a low rate but high fees may have a higher APR than one with a slightly higher rate and no fees.

APR is most useful when comparing two 30-year fixed loans you intend to keep for the full term. If you plan to refinance or move within a few years, APR overstates the true cost because the fees get amortized over a much shorter period.