Rates & APR, Explained

Why do mortgage rates change constantly?

Because they're priced by markets, daily. Inflation expectations, the broader economy, and the bond market all push rates around — mortgage rates track closely with long-term bonds.

And why did my friend get a different rate than the ads?

Advertised rates assume a specific borrower profile. Your rate reflects your credit profile, down payment, loan type, property type, and any points you choose to pay. Same market day, different inputs, different rate.

Takeaway: compare offers made to you, on the same day, with the same assumptions. That's the only apples-to-apples there is.

The rate and the APR are different numbers. Which one is real?

Both — they answer different questions. The interest rate is the cost of borrowing the money; it drives your monthly principal-and-interest payment.

APR (annual percentage rate) folds in certain lender fees and costs, expressed as a yearly rate — it's designed to help you compare the total cost of loan offers, not just the sticker rate.

So a lower rate could still be a worse deal?

If it comes with heavy fees, yes. A wide gap between rate and APR is your cue to ask 'what's in the middle?' That question alone makes you a sharper shopper than most.

If rates move daily, what stops mine from changing before closing?

A rate lock. Once you're under contract, your lender can lock your rate for a set window — commonly enough to reach closing — so market moves during that window don't change your deal.

What if closing runs long?

Locks can often be extended, sometimes at a cost — one more reason responsive paperwork (yours!) keeps a loan on schedule.

And if rates drop after you lock? Some lenders offer options for that scenario; ask what's available before you lock so you know the rules of your own game.