APR is simply put one of the most confusing terms in the mortgage process! In actuality, the APR is different from the note rate. The reason for that is that it includes the true cost of the loan in its calculation. Unfortunately different lenders calculate APR’s differently, depending on what is designated as an “item payable in connection with the loan”. For that reason, a loan with a lower APR is not always the best loan. Use the APR as a starting point when shopping for a loan, but compare all the costs in the Good Faith Estimate to see what you are actually paying. There is no substitute for getting a Good Faith Estimate and reviewing the non-recurring costs.