Q. How do I know if I will end up saving money, if refinancing costs money?

A. You can figure this out by doing what's called a "break-even" analysis. In order to save money with a refinance, you must stay in your house long enough for your initial losses to be recouped. That is, weigh your lower interest rate and lower monthly payments against the cost of the refinance, and if are in your house longer than the "break-even" period, then you will save money. Helpful tip: there are many resources available on the web to calculate the costs and "break-even" period of a refinance. They weigh all of the factors involved, including time, taxes, and insurance.

Q. Can I get a better interest rate with a mortgage broker, than with a bank?

A. A mortgage broker represents more options for the borrower. Brokers are in constant contact with numerous lenders, so they might know of companies that you would normally not, such as out-of-state mortgage companies or lenders, who are also licensed in your state. And because they process the paperwork for the lender, the lender in turn discounts the loan to the broker because it costs them less. Keep in mind that according to the Federal Truth in Lending law, the discount given to the broker must be disclosed to the borrower.

Q. How do I get the best rates?

A . The very first thing to do would be to conduct some research. The market fluctuates along with the trends on Wall Street, and can vary tremendously from year to year. If you take note of the trends and the overall pattern of interest rates, you can get a good idea of when would be a smart time to borrow. Next, learn how to use an Annual Percentage Rate (APR). It is a tool for the borrower to calculate the true cost of the loan, in a yearly rate, and to be aware of all fees. This is a protective mechanism to keep companies from hiding costs. Remember that when shopping for a new house, you can meet with a lender beforehand to pre-qualify for a loan. They will help you determine in advance the costs and advantages of different loan programs.

Important tip: A larger down payment will get you the best rate, normally if it is higher than 20%. If you have money available now, you can reduce your mortgage loan amount by adding points to your new loan. This way, by paying more money up front, you can reduce your interest rate.

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