I am using the NerdWallet Refinance Calculator to compare current loan with new loan. https://www.nerdwallet.com/mortgages/refinance-calculator/calculate-refinance-savings

My question is should I put in the interest rate or the APR where it is asking for 'interest rate'?

For the New Loan, it is also asking for loan costs so which led me to believe I should put in the interest rate (my understanding is APR is the combination of interest rate + loan costs). But the original loan information does not ask for Loan costs making this confusing.


  • 1
    Since the NW calculator can't know your insurance or property tax rates (which should be the same no mater whether or not you refinance), I'd use the nominal interest rate.
    – RonJohn
    Dec 12, 2020 at 22:52
  • Why not calculate both and compare the results? Apr 30, 2023 at 16:54

1 Answer 1


Use Interest Rate. The APR is the effective rate when closing costs and prepaid points are taken into account (to be a more accurate comparison between loans). The Interest Rate will tell you what your payment will be (along with the amount borrowed and the length of the loan, of course).

  • Thanks, I agree with you that using Interest rate seems appropriate for the New Loan information where closing costs are being asked separately. But for the original loan section, they don't ask closing costs so wouldn't it be wrong to put in the Interest rate there? Why are they not considering closing costs for the initial loan but do consider it for the New Loan?
    – Gadam
    Dec 14, 2020 at 13:40
  • You should still use the Rate. The calculator will tell you how much lower your payment will be (or how much less interest you'll spend if you're reducing the term). You have to balance that against the closing costs to see if it's worth refinancing. APR won't tell you that because it treats the closing costs as if they were paid off over the life of the loan, which is not how it works (unless you borrow extra to cover the closing costs).
    – D Stanley
    Dec 14, 2020 at 14:39
  • APR lets you compare two new loans more accurately - e.g. a loan that has a 2% Rate but has $3000 in "points" versus one with a 3% with no "points". How do you know which is better? The APR will tell you if it's worth paying the points upfront.
    – D Stanley
    Dec 14, 2020 at 14:42

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