are only charged once, so if you have a mortgage rate of 6% and are charged 1% for the points, that does not mean you have a 7% mortgage.

 

7. The truth about rates

 

Mortgage rates change from time to time. But you need not be alarmed by this factor. Basically, you have to also find out about the average rates in the city you are in, and go with how the mortgage rate and trend flows.

 

8. 15 years vs. 30 years

 

Most mortgage rates cover either a 15-year, 20-year, or 30-year term, but some are longer. With longer terms of repayment, the total amount paid out to the lender is much higher, but the monthly payment will be lower.  If you can afford the payments on a shorter term, you’ll save a lot of money over the course of the mortgage.

 

9. Fixed rate vs. adjustable-rate mortgage (or ARM)

 

In a fixed rate mortgage, the APR is constant over the life of the loan.  In an adjustable rate mortgage, the rate will fluctuate based on changes in the credit market, usually based upon the prime rate.

 

10. The best among the rest

 

Consider that a lower rate mortgage is generally better, but consider the extra charges that points will add to the total lifetime payment.  If you plan to live in the house for many years, the points will not be a considerable factor, but if your goal is to buy the house, fix it up, then sell it and move on, points should be factored in.  If that's your idea, then perhaps a higher rate and fewer points or no points might work out better.

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