Mortgage Rate Comparison: Comparing mortgage rates can be confusing and difficult if you are unaware of the terms used to describe the actual cost of a mortgage. Comparing mortgage rates is much easier if you understand the terminology and can get a handle on the actual costs of a mortgage.The first term that is used commonly is the A.P.R. or Annual Percentage Rate. When using this term to compare mortgage rates, make sure that the lender is adding all costs that are considered "Non-recurring" into the loan as most of the costs affect the A.P.R. "Non-recurring" costs are those that are a one-time charge associated with the loan and they include origination fees, discount points, appraisal, processing, underwriting, loan document charges, title and escrow fees. Items which are recurring are taxes, interest, insurance, mortgage insurance and home owners insurance (if applicable).
Be aware when comparing interest rates that A.P.R is the actual interest rate paid when all loan fees are included and the loan is paid over the entire term.Additionally when comparing mortgage rates, make sure that the lender is including all fees and get a good faith estimate along with a truth in lending disclosure which will disclose the A.P.R. as discussed.The good faith estimate is a disclosure of the fees that will be charged in the transaction including non-recurring and recurring charges. When Comparing mortgage rates, look at the fees shown by each lender and see whether or not the fees are similar.
Because some of the fees like escrow and title may be third party fees, they are estimated and some may be estimated too high or too low. Comparing mortgage interest rates is much easier when you understand the terms.