In today's world where most people need to take out a mortgage (loan) in order to purchase a home, it is important to understand the terms of repayment on that mortgage. When taking out a mortgage one of the most important things to discuss with your banker is the interest rate. The higher the interest rate the more money you will pay back to the bank over the duration of the loan.
Cap rates are used to evaluate the potential worth or value of an investment deal. Cap rates also allow for a simple numerical comparison of investments that can be hard to compare using other means.