Do not choose a lender for refinancing your home just because he has the lowest APR (Annual percentage rate) on paper. Their are a variety of other things you must take into consideration along with that rate. Such as...

-The Type of Interest Rate
Basically, their are two different kinds of mortgages. A fixed rate mortgage is where you lock in a interest rate for the life of the loan. Your payments will never change due to market conditions. An adjusted rate mortgage (ARM) however is a different type of loan. This type of loan often has a very enticing rate at the beginning, but in time, this rate will go up and their is nothing you can do. Your mortgage payment may fluctuate from month to month depending on financial and housing markets. Generally a fixed rate loan is considered safer and more stable, although it is not the correct answer for every person.

-Terms of The Mortgage
This is how long the mortgage will last. Typically a shorter term will mean higher payments but less over all interest paid. A longer mortgage affords smaller payments spread out over more time but more interest will be paid. Which choice is correct for you is dependent upon your specific situation.

-Know What Points Are
Points can sometimes be called either origination or discount fees. These are fees you pay the mortgage lender or broker you choose. Sometimes a no cost or low cost closing offer is available but generally this is not a good idea. You want to pay as much or all of the fees you can upfront. Otherwise, you will be paying interest on these fees for the length of the mortgage. One point is equal to 1% of your loans total amount, keep this in mind when calculating costs.

-M Petrone

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