APR stands for Annual Percentage Rate. The APR is what determines how much you will spend on your mortgage. The interest rate is basically the price you will pay every year to borrow the cash, usually expressed as a percentage figure. It doesn't represent any charges or fees you might have to pay for your loan. However, an annual percentage rate (APS) is a broader measure of how much the overall cost of borrowing the money will be.Mortgage lenders usually charge the APR based on various things. For example, they could consider the term of the loan and the amount you plan to borrow, your credit rating, the area in which you live, and whether you plan to make your payment over the life of the loan or a set number of months. They will use all these factors to determine your APR. Here's a look at the types of APR that are usually charged:Nominal APR refers to the APR that lenders tack onto the end of a loan for when the loan is made. Most people have seen APR listed on mortgage loan paperwork and have been familiar with its meaning. This APR includes the 3% service charge that lenders tack onto the final balance of the mortgage, as well as all the other miscellaneous closing costs. This is not the total APR, but the nominal interest rate that lenders use as the basis for their loan APR.Mortgage interest includes a markup of borrowers' actual principal. This markup occurs on mortgages that have "teaser" fees. These are non-refundable fees that mortgage lenders tack onto the principal balance of a loan in order to boost their profits. While these upfront fees can add up to a large amount of money over the life of a mortgage, they don't contribute to the bottom line. Instead, they go to the principal of your loan, where they earn the most profit. Introductory APR may lower your monthly payment, but it will not reduce your principal.Homeowners who refinance to extend the loan term to get a break on their interest rate for the life of the mortgage. This is because the longer they pay interest on the mortgage, the more the lenders earn from them. Mortgage interest rates are based on the prime interest rate plus all the lenders' fees and charges. Extending the term lowers your monthly mortgage payments, but does nothing to reduce the lenders' profit. It's better to keep the loan term at its current level for the lifetime of the loan rather than to refinance to a lower level later.Borrowing to pay off existing debt is another way to get an APR decrease. When you borrow money to pay off an older account, your APR becomes zero. However, if the new loan has higher fees than the older account, the APR becomes greater. For example, if you have a credit card with a balance owed on it and you make a purchase of a certain dollar amount, your APR will be higher than it would be for a new account. In these situations, borrowers benefit when they borrow from their existing credit cards to pay off their debt.If you want to increase your mortgage payment and reduce your overall APR, you can use a balloon payment. A balloon payment is simply a large payment that is made to the lender and paid back within a period of 30 years or so. Before you decide to take out a mortgage, you should compare the rates and terms of various balloon mortgage programs. Most programs allow you to choose between fixed and adjustable interest rates, so you should check to see which one best suits your needs. You also might want to consider how long you plan to live in your house, because the longer you live in it, the more your monthly mortgage payment will increase over time.There are some mortgage rates that are tied to the Bank of America mortgage rates. These rates tend to stay fairly stable, so it may be in your best interest to choose a fixed mortgage rate and avoid changing them every year. There are also mortgage rates that are negotiable. Borrowers who know what they want before shopping can often get better rates. On the other hand, if you do not have a good idea, you should shop around to see what kind of APR you can get.