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Mortgage Glossary

Interest Rate

Mike Starr·Reviewed August 2026

The interest rate is the percentage of the outstanding loan balance a lender charges the borrower each year for the use of the money. On a mortgage, it determines the interest portion of each monthly payment. The interest rate differs from the APR — it does not include fees and other costs of borrowing. Even a small difference in interest rate can translate to tens of thousands of dollars over the life of a loan.