What can I do to get the best possible rates on loans?

The details of borrowing money can be fraught with challenges. When you obtain a home equity loan or any line of credit, the disclosed APR (annual percentage rate) doesn’t reflect the additional fees and charges associated with the loan, like closing costs, points, application fees and others. And those extra costs can vary significantly by lender. So it pays to compare these costs in addition to the APR from several different lenders.

Most home equity loans have variable rates of interest, rather than fixed, and are based on some publicly available index, such as prime, or the U.S. Treasury Bill rate. As those rates change, so will the interest cost of your loan. But many lenders will draw in borrowers by offering a discounted introductory, or “teaser” rate. Be very careful, because once the introductory time period has expired, the rate you are charged can be much higher than your original agreement, so be sure to read everything you sign, carefully.

Ask which index rate your prospective loan is tied to, and how much the lender’s margin is. Some lenders will offer a limit or cap on how much your interest can vary within a particular period of time.

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