A mortgage quote can look like a page of numbers. The three that matter most are the interest rate, the annual percentage rate (APR) and any points. Here is what they mean.
Interest rate
The rate used to calculate the interest on your loan balance. It determines your monthly principal and interest payment.
APR
The annual percentage rate folds certain lender fees and costs into a single yearly percentage, so you can compare quotes on a like-for-like basis. It is usually higher than the interest rate because it includes those costs.
Points
A point is a fee equal to 1% of the loan amount. Paying points can lower your rate, and some quotes show lender credits instead, which do the opposite. Each is a trade-off between cash now and payment later.
A worked example
Take a $600,000 loan for 30 years. At 7.03%, principal and interest is $4,004 a month. At 6.78% it is $3,904, a difference of $100 a month.
If lowering the rate by that quarter point cost one point ($6,000), the break-even is roughly 60 months (5.0 years). If you expect to keep the loan longer than that, paying the point can come out ahead. If you may sell or refinance sooner, it may not.
This is arithmetic for illustration. Actual pricing, points and credits vary by lender and by day.
Questions to ask your lender
- What is the rate, the APR and the total cash needed at closing?
- How long is the rate locked, and what does an extension cost?
- What does each point or credit change?
- Are there any prepayment penalties?
Talk to a lender. Rates, loan programs and approvals come from lenders, not from websites or real estate agents. Talk to your own mortgage broker, or use our preferred lender, Rodrigo Ballon with CrossCountry Mortgage, at 858-735-0255. You are always free to choose any lender you like, and you can verify any lender’s license at nmlsconsumeraccess.org.
Where these numbers come from
- Freddie Mac Primary Mortgage Market Survey for weekly average mortgage rates.
- FRED (St. Louis Fed) for the federal funds target range and the 10-year Treasury yield.
- Federal Reserve FOMC calendar for meeting dates and statements.
- Investing.com Fed Rate Monitor, which shows market expectations for upcoming meetings based on federal funds futures, and its Fed Interest Rate Decision calendar.
Data as of Sep 24, 2026. These pages describe the past and the present and make no predictions. Investing.com and the other sources are independent of Rudy Flores and Coldwell Banker West.
More on interest rates
- The Fed's Rate Decisions vs. Mortgage Rates: What Is the Difference? — The Federal Reserve sets one short-term rate. Mortgage rates follow a different set of forces. Here is how the two relate, with the recent decisions.
- The 10-Year Treasury and Mortgage Rates: How They Move Together — Mortgage rates and the 10-year Treasury yield tend to rise and fall together. Here is the gap between them, year by year.
- What One Point of Interest Rate Means for Your Monthly Payment — A simple table of monthly principal and interest for common loan sizes, from 5% to 8%.
- Fixed Rate, Adjustable Rate and Buydowns: The Basics — How the main loan structures work, and what a temporary or permanent rate buydown means.
- Mortgage Rates Through the Decades: 1971 to Today — Freddie Mac's weekly survey goes back to 1971. Here are the average, the high and the low for every decade.
General information, not financial advice.