Q.: We've been considering refinancing our home given interest rates are so low right now, but how do we know we are getting the best deal?

A.: In today's mortgage market, consumers are constantly being bombarded with information that all too often can be overwhelming and confusing.

Technology today gives individuals rapid-fire information, but making sense of it all becomes the challenge. Logically, one would think that the lowest interest rate is probably the best interest rate. First, though, you need to understand how the interest rate is priced. There are many factors that affect your interest rate. Rates are typically priced with a “base” starting point and then adjusted according to risk factors such as credit score, down payment (or loan-to-value ratio), type of loan, how long the interest rate is locked for and even property type. Then points can be charged to discount the interest rate.

To reach the highest number of consumers, most lenders will use the Internet to communicate with you. Although this gets you the information rapidly, it doesn't necessarily increase your understanding of the process or the program you are offered. Perhaps your lender will be available to answer questions via telephone, and this may help clear the confusion with the volume of paper you may receive to sign, but there are important questions you must ask, such as: How do you lock in a rate and is there a cost? How many days can you lock the interest rate and what happens if the rate expires? Can the rate be extended beyond the lock period and, if so, what does that involve? Again this requires you, as an informed consumer, to do your homework and have a clear understanding of the answers to those questions.

Finally the question of the process comes into play. When will the lender receive the credit report, what is a “Truth-in-Lending” form, what does “APR” mean? Who orders the appraisal? Who will be at your closing? As one can imagine, not having a good working knowledge of this process or understanding the terms can leave many questions unanswered. This is why working with a professional is just as crucial and just as important as the interest rate and program you are offered.

In conclusion, interest rates on mortgages are subject to change, sometimes on a daily basis and sometimes even more frequently, depending on market conditions. Getting a competitive rate, combined with reasonable closing costs, is much more challenging than one might think. Often we, as consumers, get so focused on just rate that we miss the overall picture and it can be a costly mistake. Know your lender and your loan officer, understand the process, the fees involved and the loan product. This will ensure that you end up with the right product to meet your specific needs. Technology is a great tool, but don't let it depersonalize the process too much.

Homeownership is the keystone to your financial future and should not be taken lightly. And, if you are purchasing a home, get some advice from a professional Realtor. They cannot discuss mortgage terms and interest rates with you, but they know the best people in the area by reputation and can recommend someone.

This information has been provided by the Greater Manchester/Nashua Board of Realtors in conjunction with the New Hampshire Union Leader's Advertising Department. Any questions about the content should be directed to the realty board at 166 S. River Road, Bedford, 03110; or by email to info@gmnbr.org.