When you are ready to purchase a home or refinance your existing mortgage, choosing the right mortgage is not quite as simple as it may seem. There is more to choosing the right loan than simply looking up the current Denver mortgage rates and choosing a lender that charges low fees. As you look for a Denver refinance or mortgage professional, keep these tips in mind:

First, you need to know the mortgage product you are looking to buy. Denver mortgage rates are very low, but the wrong mortgage product could end up costing you significantly in the long run. For instance, the interest rate on a mortgage with an adjustable rate is going to be lower at the outset of the loan than a fixed rate mortgage, but these rates can increase, which could make the mortgage more expensive down the road.

That's not to say that adjustable mortgage (ARM's) aren't 'good' products. Where we got into trouble was with the 'risk management'; starting with understanding exactly what the risks are. Here's how to do it: all ARM's have an index (like T-bills), a margin (how much they can add to the index), and caps (a limit beyond which they can't raise your payment or rate for each period).

Your lender should show you - on paper - what your total payments look like over 5 years assuming the maximum possible adjustment each period (1-year, 3-years, etc.). That way you can see how much more you would pay over a fixed rate for the same period. Then you decide if it's worth the risk. If your lender won't (didn't) do it that way, I think you have the wrong lender.

Another consideration to make when shopping for a loan is the length of the loan. You can get a mortgage for just about any length of time. Most consumers get a loan for between 20 and 30 years, but you can make this longer or shorter as your needs demand. The longer you have your mortgage, the more it is going to cost you in the end, but the smaller your monthly payment will be. You will also find that the current mortgage rates on short-term mortgages, such as 15-year loans, are lower than those for long-term mortgages. This is due to the fact that the bank will likely get more of the interest out of a short-term loan, because you are less likely to move during a 15 year time period than you are during a 30 year time period. Make sure you have the option to 'pre-pay' without penalty - you might want to make periodic 'extra' payments to principal to reduce the length of the loan.

Recent problems in the U.S. financial markets have shown that the actual lender is important when you get a mortgage. Make sure you are using a lender with a sound financial track record. This is not the time to choose lender that is new to the market. Consider the reputation of a mortgage lender carefully when purchasing your next loan.

Buy local. If a problem comes up, it's really nice to have a person right here in Denver whom you can call or visit on short notice. Everyone likes to shop around for rates on the internet, but give your local lender a chance to match the rates you find. If they are "real" numbers, they should be able to be competitive.

As you shop for a loan, consider the varying payment options you are offered. Most mortgages require payment on a monthly basis. However, you can save a significant amount of money over the life of a loan by choosing a loan with a different repayment option.

For instance, if you pay your loan bi-weekly, you will actually pay a couple of extra payments each month, which can save hundreds of dollars of interest over the life of the loan. Adding just a little extra to the principal on your payment, such as in an accelerated bi-weekly payment plan, can save you thousands. Making one extra payment per year can reduce a 30-year loan to about 22 years.

If you wish to save money over the life of your loan, look for a lender that offers a non-traditional repayment option. However, watch out for fees charged when you use these options, as these can make the savings less beneficial.

When you have a few loans that seem to be very similar, look into the other costs associated with each one. Current interest rates are not the only costs of your mortgage. Ask to see the underwriting, processing, recording, document preparation and origination fees that make up the total cost of obtaining financing. Choose a loan with the least number of fees.

If you are going to be required to purchase other products, such as mortgage insurance, make sure the cost is competitive with the lender you have chosen. Remember, when you get a mortgage or refinance your existing loan, you are committing yourself to paying that bill for many years. Take the time to shop around at the various banks and private lenders that are currently offering loans. Make sure you are getting the best possible offer before you sign on the dotted line.