This information kindly provided by Richa Badami of Countrywide:

Do you know why there is a difference between the interest rate and the APR?

The interest rate is, simply, the actual rate of interest that is charged on the principle balance of your loan. The APR is a complex calculation that was originally designed to help consumers understand the cost of the loan, inclusive of interest and certain costs associated with closing. The problem lies in the fact that the APR is easily manipulated by inexperienced or unethical lenders, and can be easily misunderstood by consumers. Many items are included in the calculation of the APR such as interim interest and mortgage insurance, which have nothing to do with the interest rates and closing costs charged by the lender. Due to some of these defects in the calculation, using only the APR to compare lenders is not always reliable.

Richa Badami, CMPS Creating Wealth with Mortgage Planning.
Certified Mortgage Planner
The Badami Empower Mortgage Group
703-928-3030 Mobile
703-779-7042 Direct Office
866-409-3141 e-Fax
www.RichaBadami.com