Hi- If anyone has ever had the question of what is the difference between APR and APY, this could be helpful information. I just recently had this question come up from a first time buyer.
Do not be concerned as much with the talk of interest rate, rather request a GFE (good faith estimate) which is a disclosure of all the fees and charges associated with the loan. This way you can compare apples to apples. You want to look for a rate that has the APR (annual percentage rate) and APY (annual percentage yield) as close to each other as possible. The difference in these two rates is really what you are paying in fees and associated costs for the loan.
For example a lender may advertise a loan rate of 6.25% but in the fine print mention its APY of 7.5%. That first rate may sound great, but it is not nearly as attractive as a loan that is 6.45% with an APY of 6.5% over the life of the loan. As borrowers we are always hearing about interest rates, searching for the lowest possible rates, listening to what the federal reserve is going to do with the rates, but lenders disguise rates with the APR disclosure in big bold type while really the APY reflects the intra-year compounding that is happening silently behind the scenes so my suggestion is to make sure that you shop your loan with several people if you can and make certain that the offers that you get compare on other levels besides the advertised interest rate. Make sure to ask for a good faith estimate.