What does APR stand for in mortgage lending?

The correct understanding of APR in mortgage lending is "Annual Percentage Rate." This term represents the total cost of borrowing on a mortgage expressed as a yearly interest rate. It encompasses not only the interest charged on the loan but also any associated fees or additional costs, providing a more comprehensive measure for borrowers to assess the true cost of their mortgage over its term.

The significance of the APR lies in its ability to help borrowers compare different loan offers more effectively, as it reflects the overall expense of the loan beyond just the nominal interest rate. By law, lenders are required to disclose the APR, ensuring transparency and helping consumers make informed decisions when choosing a mortgage.

The other terms presented do not accurately represent the concept of APR in the context of mortgage lending. Understanding the definition and purpose of APR is crucial for borrowers to evaluate the financial implications of their loan options.