Loan Rates

Borrowing Money isn't Free and Loan Rates are Part of the Cost

There are all sorts of loans available for business and personal needs. Every loan has some sort of rate attached, since the lender has to be able to make some money back, plus a profit, for letting someone borrow theirs. Loan rates generally include interest, which we're all at least somewhat familiar with, and set at the discretion of the lender. What makes the loan industry seem so competitive is that many lending institutions advertise their rates as the best and their company as the most reliable. Unless you know something about financial dealings, it is easy to be confused by all the terms and methods of computation.

For the majority of people, a home mortgage is the largest loan they'll ever have. That makes it pretty important to find a lender that they trust and to learn in advance some of the ways that mortgage loans work. By completing the online mortgage application found on this page, you'll benefit from several companies bidding for your business. This competition empowers you to shop for the right mortgage refinance program for you – from highest level of customer service to lowest up-front points or fees and best loan rates. You'll receive several quotes – up to 4 in all -- from trained mortgage brokers and loan rates specialists who will help you determine the best deal for you.

One term you should be familiar with is the Annual Percentage Rate (APR). This is supposed to tell you exactly how much your loan, mortgage or otherwise, is going to cost you per year. In fact, under the Federal Truth in Lending Laws, all mortgage companies must disclose exactly what is included in your loan. When you browse the Internet or see TV or print ads, you'll notice that loan rates vary a great deal. The problem with just seeing the APR is it allows the companies to keep the mystery of the full cost of the loan – they prevent you from computing exactly how much any given loan will actually cost. Those ads you see for the "lowest interest rates" often hide other fees you'll incur.

Even when you know the APR associated with your loan, you still don't have the whole picture, but it does tell you more than just what the loan rate is. Finance can be complicated and interest rates are tied to various market indexes. That means they change often -- almost daily. When you find out your initial loan interest rate, you should know that with an Adjustable Rate Mortgage (ARM), it will fluctuate over time. In other words the initial APR is really only accurate for an introductory period.

In addition to interest based on specific loan rates, one thing your payment often includes is mortgage insurance and other fees such as closing costs. That's why it's of the utmost importance to be clear on exactly what is included in your total loan. For instance if your closing costs are several thousand dollars, you should pay them upfront if you can afford to. If it's included in your total loan, you'll be paying interest on the additional amount for the life of the loan.

Your lender is required to disclose all these details to you, but if you go in uneducated, you may not fully understand what they are telling you. Some people are comfortable asking for a clear explanation while others are too embarrassed to admit they don't "get it". Doing more research about loan rates before you apply will allow you to both understand more and ask better questions.

Some of the other things to inquire about are penalties for early payment, how long your loan rate is locked in, interest only loans, and those with balloon payments. Before you take out any loan, be sure to learn about more than just the loan rates.

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