The annual percentage rate (or APR) is the amount of interest on your total loan amount that you'll pay annually (averaged over the full term of the loan). A lower APR translates to lower monthly payments. (You'll see APRs alongside interest rates in today's mortgage rates.)

In many cases, it makes the most sense to choose a mortgage loan with a lower APR. However, sometimes a loan offer with a lower APR may require you to pay mortgage points or other fees. If you'd rather use that money toward a down payment or to buy appliances and furniture for your new home, you might choose a loan with a slightly higher APR that doesn't have these requirements.

While the APR makes it easier to compare mortgage offers, you'll want to weigh all of the factors involved in getting a mortgage loan. These include the size of your down payment, closing costs and money you'll need to set aside to furnish and maintain your home.