By Huy Chea and Shayla Sharp
Understanding the jargon in the real estate industry can be confusing. It's easy to get caught up in the excitement of buying or selling without really understanding what you are agreeing to.
Understand What You Sign
An acronym thrown around constantly in the world of real estate, loans and mortgages is APR.
What exactly is APR? An APR is an Annual Percentage Rate which is a type of interest rate. It consists of the current interest rate plus various non-reoccurring fees. Non-reoccurring fees that may be included in your APR:
- Origination fee
- Loan discount or buy down rate
- Underwriting fee
- Wire transfer fee
- Interest per day
- Mortgage insurance premium reserves, and
- Administrative fee or processing fee.
These fees will vary from company to company and help consumers to compare loan options and lenders.
What do APR values depend on? Simply put, their resources. Resources include things like the number of investor contacts and who those investors are. This is also why some loan programs are only available for a limited time. (Remember, investors are speculators, if it will be profitable to them, they may offer these programs again.) Individual qualifications may also cause APR values to differ (i.e. credit ratings and history). Values change with loan programs, limited loan programs and market activities as well 
as these things influence investor confidence.
A Fair Deal
Take the time to read through and compare good faith estimates or disclosure statements. (Disclosure statements must be given to applicants within three days fo receipt of written loan applications. TILA, Regulation Z) Just because you have applied for one loan doesn't mean you are bound to it. Shop around and get at least three. Sometimes, what seems to be a great rate turns out to be the opposite due to excessive fees. Here is an example of a disclosure statement.
Still Confused
Seek out someone you trust who is knowledgeable in this area (i.e. your banker, financier, Realtor, etc.) to help you make sense of what is actually in your good faith estimates.
Do your research. Determine what is most important to you and what is within your budget. Shop around those things. Your investment is worth taking the extra time.
Article published on NWAbode.com in January 2009.
Huy Chea is a licensed REALTOR, GRI, CNE for the state of Washington working with the company of Coldwell Banker Bain in Redmond, Washington.
Shayla M. Sharp, owner of White Dragon Studios, is a freelance writer and designer. She lives in Oregon where she works under the supervision of Stars, her border collie.