The CFPB says: “The TIP tells you how much interest you'll pay over the life of your home loan, compared to the amount you borrowed. The total interest percentage is calculated by adding up all scheduled interest payments and then dividing the total by the loan amount to get a percentage. The calculation assumes that you will make all payments as scheduled. The calculation also assumes that you will keep the loan for the entire term of the loan.
The total interest rate is something new. According to the Consumer Financial Protection Bureau, the TIP tells you how much interest you'll pay over the life of your home loan, compared to the amount you borrowed. The most popular average 30-year fixed mortgage interest rate is 5.48%, according to data from S%26P Global. This is because the TIP is based on the total interest you would pay over the entire term of the mortgage, while the interest rate and APR are annual rates.
The TIP is not the same as your interest rate and is not the same as the annual percentage rate (APR). The Total Interest Rate (TIP) is a disclosure that tells you how much interest you will pay over the life of your home loan.