As a smart mortgage shopper your first and most critical goal is to understand clearly what is at stake. That, almost certainly is an awful lot more dollars than you realize. So much, that it might shock you to discover (below) how costly a wrong loan decision can be.When you know this you will understand why you need to keep your wits about you.

Note that over the past twenty-five years 10 percent is the average mortgage rate, though as I write, with the year 2000 looming, 30-year fixed-rate mortgages are available at around 7.5 to 8 percent.When it is time for you to commence your own search, you'll need to find out early what the then-current best mortgage deals are (rates and fees). That means research—perhaps nothing more initially than reading lenders' newspaper ads and a half-dozen phone conversations with different lenders, and certainly talking about mortgages with your local exclusive buyer broker. Then, when you begin to shop actively for a loan, you'll be able to recognize a good deal from a come-on.

Now, let's illustrate what exactly is at stake. What follows are a few straight forward examples of home loans. Pay attention to the huge amount of interest paid in each case. Also, keep in mind that interest rates go up and down. As you read this, rates may be lower or higher, but the principles explained here always hold true.

Example 1. Suppose you take out a $100,000 mortgage at 10 per-cent for 30 years. If you stay in the house for the full term (30years) you will pay back, in total, $315,909. That figure includes your $100,000 loan (the principal—PLUS interest of $215/909!

Example 2. Let's look at the same loan of $100,000 over 30 years,but this time at just 8% interest. Over the full term of the loan your payback amount will be, in total, $264,149. That includes your $100,000 loan—PLUS interest of $164,149!

Example 3. Now let's see what's having just one half point off that 8 percent rate will do. Loan: $100/000 over 30 years at 7.5 percent means you'll pay back, in total, $251,712: the $100,000you borrowed—PLUS interest of $151,712! So, cutting just onehalf point off the rate saved you $12,437 over the life of the loan($164,149 minus $151,712).Notice that even the lowest priced loan here (7.5%) required you to pay back more than two and a half times the amount you borrowed (borrowed $100/000, paid back $251,712)! It doesn't seem like a mere 7.5 percent interest rate would whack you that hard, does it?

And the 10 percent loan hits you a lot harder, requiring you to pay back more than three times the loan amount (borrowed$100,000, paid back $315,909). Total payback figures are far too seldom spelled out for borrowers, but when they are, they usually come as a shock.

Now let's make all this more understandable. Let's put it into concrete form. How do these and other loan features affect your monthly paycheck? Here's what you would pay each month in principal and interest (P+I) payments for each of the three loans.

Example 1. $100,000 loan at 10% for 30 years $877.58 per month

Example 2. $100/000 loan at 8% for 30 years $733.77 per month

Example 3. $100/000 loan at 7.5% for 30 years $699.22 per month

Now let's widen the comparison. What if an unwary homebuyer pays 8.5 percent when the same loan might have been available from another lender at 7 percent? This is not uncommon; it happensmuch too often! Here's the outcome:

Loan A: $100/000 at 8.5% for 30 years. Payback amount over fullterm: $276,800You pay back the $100,000 loan (the 'principal'), plus interestof: $176,800Loan B: $100,000 at 7% for 30 years. Payback amount over fullterm: $239,502You pay back the $100,000 loan, plus interest of: $139/502

With Loan B you will save ($276,800 minus $239,502): $ 37,298But that's an overall figure, and it's based on the loan running the full term (30 years). More practically, what's the differencebetween what you would pay on these two loans each month(regardless of how long you hold the loan)? Here's the answer:

Loan A: $100/000 loan at 8.5% for 30 years: $768.92 per month.

Loan B: $100/000 loan at 7% for 30 years: $665.31 per month.Loan B saves you $103.61 every month. That's $1,243.32 per year. If you stay in the house 10 years, you save $12,433.20 And, aswe just saw, over 30 years you save $37,298!

I hope you now have solid evidence of how imperative it is to shop wisely and find the best loan for your particular circumstances. Simply, it's your money that's at stake, lots of it, often tens of thousands of dollars that can be saved or lost, plus priceless time and your peace of mind.

However, interest rates are not your only consideration. When comparing some loans it may not even be the most important feature There are also points, fees, special conditions and loan terms,and lock-ins to consider. We'll look at all these as we go on.

Before that, however, you'll need at least a basic understanding of the types of loans that are available, and how to choose one that is right or best for you. Later we'll explore also the loan application process, what it requires of you, and how and where you can get help. And I'll suggest ways to keep your out-of-pocket expenses to a minimum. - , . ,

And finally, like it or not, mortgages require us to deal with math I'll show you how the figures work, but I'll keep it as basic and as simple as possible. So, even if you're a math hater, stick with it. All the figures are worked out for you and explained, and it really isn't as confusing as it might at first seem.