Congratulations! You've just found the perfect house in the perfect neighborhood. Over the next 30-60 days, you'll need to get everything else in place to ensure that this purchase happens. Or perhaps you're already in your dream home, and now it's time to refinance your mortgage so that you can consolidate expenses or do some home improvements. In either case, now you just have to find the perfect mortgage.

Finding a mortgage that's right for you should be easy. There are literally hundreds of options to choose from these days. From Fixed Rate Mortgages, Adjustable Rate Mortgages, and Hybrids, to Interest Only Mortgages, Monthly Option ARMs, and Pay Select Mortgages, to name just a few. Mortgages are available at interest rates ranging from 1.00% to well over 10.00%. You can finance up to 100% of your home's value, and in some cases, you can even finance your closing costs.

Since there are so many options to choose from, you'll want to obtain advice from a professional. You could pick someone from the phone book, or call the person who sent you that slick looking letter in the mail. You could even contact one of those companies who advertises on TV – their paid spokesperson looks very trustworthy.

Before you pick up the phone, keep in mind that you're getting ready to make the most significant investment you've ever made. The mortgage you choose could add thousands of dollars to the cost of the purchase. Wouldn't you rather put that money towards something worthwhile, such as financing your child's college education or your retirement? Here are a few things to consider before settling for the "Mortgage du Jour".

It's a Matter of Timing
Industry experts have determined that the average time someone will live in a home today is just under seven years. Perhaps even more importantly, the mortgage you take out today may be in effect for a shorter time than that. Over the years, many homeowners have refinanced their mortgages multiple times to take advantage of the increased equity in their home.

When weighing mortgage decisions, the single most important factor you should consider is how much will this mortgage cost you over the time period you have it in place.

Interest rates, while significant, are just one component of the equation. There are also closing costs, which are required when obtaining any mortgage loan. Is it more important to get the lowest possible interest rate if the fees required will cost you more in the long run? Of course not.

A Couple of Questions
When shopping for a mortgage loan, you should ask questions to determine which loan is right for you. These questions include:

• How long do you anticipate living in your home?
  
  
• Do you expect any changes in your life over the next few years, like expanding your family or having children move away?
  
  
• Do you expect any changes in income due to possible promotions, relocations, or pending retirement?
  
  
• Are you expecting a change with regard to investments?
  
  

When you speak with a mortgage professional, they should ask you these same questions. If they do not, then they may not have your best interests in mind when they're presenting you with mortgage options.

The reason these questions are important is that different mortgage programs offer specific benefits that appeal to different people. What one homeowner might find incredibly appealing might cause another to reach for the Rolaids®. More importantly, somewhat aggressive programs like certain Adjustable Rate Mortgages could potentially save someone thousands of dollars when used properly and fully understood.

What About APR as a Shopping Tool?
One tool which Federal Regulators put in place to try and level the playing field for mortgage shoppers is the APR, or Annual Percentage Rate. The APR is used to calculate the total costs of a loan over the time it will be in effect. If you have a loan that has no closing costs, the APR should equal the interest rate quoted for the loan. If the APR is significantly higher than the quoted rate, then more costs are required to obtain financing. So in theory, if you have two loans with the same interest rate but different APRs, the loan with the lowest APR should be the least expensive choice.

However, there are a couple of problems with using APR as a tool for comparing mortgages. One is that few lenders calculate it in the same way. One may quote the loan very conservatively, resulting in a higher perceived rate. Another may not reflect all of the charges properly, resulting in a lower perceived rate.

Another problem that APR presents is that it assumes all loans will be paid off at the end of the term of the mortgage. This doesn't take into account any potential pre-payment of principal during the time the loan is in effect, which is pretty unrealistic. Also, with Adjustable Rate Mortgages, all calculations are based on estimates in the future. This can be flawed right from the start of the process.

It's All About The Bottom Line
When shopping for a mortgage, it's important that you and your mortgage professional ask the proper questions. Otherwise, this is truly a case where what you don't know could cost you.

Make sure that you are provided with an opportunity to see how much your mortgage will cost you over the time you anticipate having the loan in effect. Also, look a little further down the road. Request an evaluation that will project costs in the event that things change a little sooner than you anticipate. A good frame of reference is anywhere from three, five, or even seven years.

Whether you're planning on buying a home or refinancing one in the near future, working with a reputable mortgage professional will enable you to choose the right mortgage and save a lot of money in the process!