1. The APR will often be different from the quoted rate for the mortgage. Keep in mind that an APR includes the various costs that go into your interest rate, whereas the stated interest rate is only that rate itself.
2. An appraisal is a necessary part of the mortgage loan process, and it is customary for the buyer to pay for this service. However, given all the competition out there, many lenders are now offering free appraisals. So shop around.
3. Sometimes an advertised interest rate does not show the points that will be added on later. You may think you're getting a low rate, but when you actually get the mortgage you find that the rate is even higher than the going market rate. Make sure you get the lowest rate with the lowest points.
4. A lender cannot collect more than 2 months' worth of insurance and taxes from you.
5. Interest on a mortgage is paid in arrears. Try to have the escrow close on the last day of the month. This way the next payment won't be due until the first day of the month after next. This way you will have a whole month before your first payment comes due.
6. The Department of Housing and Urban Development offers a great booklet on settlement costs and other information about buying a home. You can download it free at HUD's website: www.hud/gov/fha/res/stcosmsw.bin
7. Many mortgages do not expressly say that a balloon payment is involved, where your final payment is larger than all of your other previous payments. Ask your lender, your agent, and your attorney. Don't get left in the dark.
8. If you have a fixed-rate mortgage, you know where you stand all the time, because your payments do not vary. For an ARM (Adjustable-rate Mortgage), payments are always lower initially than for a fixed-rate mortgage. You have to decide which one is right for you.
9. Convertible mortgages are usually the best ones available on the market. But do shop around because they come in all varieties. Make sure you choose the right one for you.
10. The best time to get an ARM (Adjustable-rate Mortgage) is when interest rates are high. This way, you know that when interest rates fall, your payments will go down as well. The worst time to get an ARM is when interest rates are low. Your payments will only go high.
11. Teaser rates (very low introductory rates) do not last more than a few months. Then the rates shoot up to normal market points, or higher.
12. If you are going to hang on to property for a long time, an ARM with a good teaser may be best for you. First of all, you'll benefit from the low teaser rate, and then you can sell the property before the ARM interest rate (and your payment) rises.
13. Make sure you ask the lender what the rate will be once the teaser rate is gone. And make sure you can live with this change.
14. All mortgage loans are tied to market indexes that dictate the interest rates that will be charged. If you are going to keep a property for a long time, make sure that you get a stable index. Ask the lender. He must show you the history of the index going back at least 10 years. Ask to see what the index did during the volatile years of 1978-1982. These years will show you what the index does when interest rates shoot up.
15. Lenders are not looking out for your best interest. Get educated. Ask questions. Investigate. Be informed.

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