Interest rates can be confusing for many first time home buyers but understanding them is of great importance when looking to purchase your new Del Mar home. Interest rates must be compared in an apples-to-apples environment since the actual rate for a mortgage loan can be affected by hidden expenses and closing costs. There are two main types of mortgage loans -  Fixed rate loans and Adjustable Rate Mortgage loans (ARMs). 

Fixed rate mortgage loans are much easeir to compare since the rate never changes over the life of the loan and the stated is often the true rate which then can be compared with other rates directly. However, make sure tofind out the closing costs associated with each loan being compared. If the costs are comparable, the stated rates can be directly compared to determine which is the best offer. If the costs for one loan are much higher than another with the same stated rate, the one with the lower closing costs will result in a lower effective rate, or Annual Percentage Rate (APR) than the other. Should one consider an Adjustable Rate Loan (ARM), the understanding and comparisons are more difficult.

There are five basic parts to most ARMs:

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