The Interest Rate is the name of the game when it comes to shopping for a home loan. But
it is not as simple as dailing a mortgage company and getting a quote. There are hundreds
of programs and many options to these programs that will affect your decision.
Be sure to learn about and ask for the APR
of your quoted rate, which will figure into account many of the fees charged by mortgage
lenders. We have provided some information on APR and the different options available to
you when selecting an interest rate and a loan program.
The Annual Percentage Rate figures all of the costs to finance, including interest and
fees, and gives you an effective interest rate. APR is helpful for comparing programs with
different rates and fees.
1/1, 3/1, 5/1, 3/3, index, margin, yearly and lifetime caps. Learn the lingo before asking
for an ARM quote.
Lender Funded and Borrower Discount Points can buydown the interest rate for the first
couple years. Great to ask about if you for see more income in a few years or to help with
the increased housing payment.
Graduated Payment Mortgages, with lower payments in the beginning, help with lower initial
payments, but are not as popular.
Libor ARM's are based on the London Inter Bank Offered Rate eliminate the interest rate
risk for mortgage companies. These loans are often use for higher risk borrowers.