In terms of mortgage terms, what does 'APR' signify?

The correct interpretation of 'APR' in mortgage terminology is Annual Percentage Rate. This measure represents the annual cost of borrowing over the life of a loan, expressed as a percentage. The APR includes not only the interest rate on the loan itself but also any additional costs or fees associated with securing the mortgage, such as loan origination fees, mortgage insurance, and other related expenses.

Understanding APR is crucial for borrowers as it provides a more comprehensive view of the actual cost of a loan, enabling them to compare different loan offers more effectively. This helps consumers make informed decisions regarding their financing options. By looking at the APR, borrowers can understand the true cost of borrowing beyond just the nominal interest rate, which is essential for managing their overall mortgage expenses.