The Annual Percentage Rate, commonly referred to as the APR, is an oft-misunderstood term. Granted the mortgage world has a lot of different terms that can be a head-scratcher sometimes, but the APR is right up near the top, if not the top, of the list. And the confusion typically starts when borrowers first receive their initial loan disclosures. The APR is simply defined as the cost of money borrowed expressed as an annual rate.