When selecting a loan, your first question will probably be, "What's the Annual Percentage Rate (APR)?" The APR is the interest that accrues on your loan each year. Next, you should decide if a Variable or Fixed Interest Rate works best for you. Variable Interest Rates rise and fall depending on economic indexes, such as the prime lending rate. In most states, this rate must be communicated to the borrower upfront. Variable rate loans must also specify a cap or ceiling. This guarantees that you will not have to pay more interest than what was agreed upon in the loan contract. Fixed Interest Rates do not change over the life of the loan. They offer the security of a monthly payment that will not change. However, fixed rates generally lock-in at a higher interest rate than variable rate loans.

Points are a one-time charge levied by the lending institution for a closed-end loan. One point is equal to one percent of the loan value. So if you take out a $20,000 loan and are required to pay one point, you will pay a one-time charge of $200. The lender may allow you to roll the points into the cost of your loan, but this can get expensive, considering you are paying interest over the life of the loan. Lenders are not allowed to charge points on Home Equity Lines of credit.

Extra charges and fees vary widely depending on the lender, and can include application fees, appraisal fees, credit checks, collection fees, title search fees, and lien reports. Make sure you understand which fees your lender requires you to pay up front. In some cases, you may be able to convince your lender to waive some of these charges.