What Is Annual Percentage Rate (APR)?

More commonly called APR, Annual Percentage Rate is a government-mandated mortgage comparison tool. It measures the total cost of borrowing over the life of a loan into dollars-and-cents.

A loan's APR is printed in the top-left corner of the Federal Truth-In-Lending Disclosure, as shown above. When quoting an interest rate, loan officers are required by law to disclose a loan's APR, too.

APR is meant to simplify the process of choosing between two or more loans. The theory is that the loan with the lowest APR is the "best deal" for the applicant because the loan's long-term costs are lowest. However, the loan with the lowest APR isn't always best.

APR makes assumptions in its formula that can render it moot.

First, APR assumes you'll pay your mortgage off at term, at never sooner. So, if your loan is a 15-year fixed rate, its APR is based on a full 15 year term. If you sell or refinance prior to Year 15, the math used to make your loan's APR becomes instantly flawed and "wrong".

Example: Let's compare two identical loans -- one with discount points and a lower interest rate; and one without discount points and a higher mortgage rate. The loan with discount points will have a lower APR in most cases. However, if the homeowner sells or refinances within the first few years, the loan with the higher APR would have been the better option, in hindsight.

Second, APR can be "doctored" early in the loan process.

Because the APR formula accounts for third-party costs in a mortgage transaction, and third-party costs aren't always known at the start of a loan, a bank can inadvertently understate them. This would make the APR appear lower than what it really is, and may mislead a consumer.

And, lastly, APR is particurly unhelpful for adjustable-rate loans. Because the APR calculation makes assumptions about how a loan will adjust during its 30-year term, if two lenders use a different set of assumptions, their APRs will differ -- even if the loans are identical in every other way. The lender whose adjustments are most aggressively-low will present the lowest APR.

Summarized, APR is not the metric for comparing mortgages -- it's a metric. For relevant comparison points, talk to your loan officer.

Removing Stains On Walls : Crayon, Mildew And More

Painting rooms in a home can be a do-it-yourself project. Armed with paint, tape, tarp and some brushes, there's nothing you can't re-color.

While some rooms call for a complete sand-down, there are some that don't, and for those, Rule #1 is that your walls must be stain-free before adding the next coat of paint.

Stains can come in all varieties and the most basic stains can be treated with a damp rag or a Mr. Clean Magic Eraser. For everything else, you'll need a more cleaning power.

For example, of all the stain-types, "grime" is the most common. To remove ground-in dirt and oil, start with 1 gallon of warm water in a bucket, then add 1 cup of ammonia, 1/2 cup of distilled white vinegar, and 1/4 cup of baking soda.

Rub gently and follow up with a clean water rinse.

For other common stains, try these remedies:

• Permanent Marker : Blot the stain with a rubbing alcohol-soaked cotton ball. Allow to air dry.
• Mildew : Add 1 tablespoon of vinegar to 4 cups of water. Spray and allow to air dry.
• Crayon : Dust a damp sponge with baking soda and scrub. Baby wipes work, too.

If your wall stains are "water stains"; the result of a leak or something similar, make sure the water source is corrected prior to painting. Then, to remove spots, mix 1 part bleach to 4 parts water, thoroughly rinse the stain, and use a hair dryer to dry the solution on the wall.

Once cleaned, your walls are ready to paint.

Mid-Year Review : Were The Experts Right About The Market?

The year is half-over. It's an opportune time to take stock of analyst predictions made at the start of the year, and to recognize that the "experts" can be wrong as often as they are right.

For as much experience and authority an expert brings to the conversation, though, nobody can accurately predict the future.

As such, there's often disagreement.

Looking back to December, some housing analysts called for a market rebound this year; while others called for a fall. With respect to mortgages, some said rates had nowhere to go but up; while others expected more dips.

As a layperson, how do you know who will be right?

In short, you can't.

Predictions are a tricky business because they're guesses about the future based on the world as it exists today. When the predictions listed earlier were made, the world was a different place.   

A lot has changed since January:

• Slowing job growth has suggested to slower U.S. economic growth
• Food and energy costs have spiked, adding inflationary pressures to the economy
• Eurozone debt issues have grown, punctuated by a near-Greek default
• Tsunamis have caused widespread damage in Japan
• Earthquakes, floods and volcanoes have harmed economic output

None of these events had occurred as of December, when the original predictions were made. Yet, each of these developments has made a deep impact on housing, and on the economy.  

So, what's a homeowner to do? Think of the present instead.

First, mortgage rates are low today -- extremely low by historical standards. Second, home values have been slow to rebound through most U.S. markets. Combined, these factors have made homes more affordable than it any time in recorded history. It's not only cheap to buy a home right now, it's cheap to refinance one, too.

Analysts are saying the home prices will rise this year, and mortgage rates will, too. Those predictions may ultimately be proven true. Until the future arrives, though, those predictions are just guesses.

Economy Expected To Have Added 80,000 Jobs In June

Friday morning, at 8:30 AM ET, the Bureau of Labor Statistics releases its June Non-Farm Payrolls report. If you're currently shopping for a mortgage, or floating a mortgage rate, be prepared. Mortgage rates can change following the monthly report's release.

Often, by a lot.

More commonly called "the jobs report", Non-Farm Payrolls reports on the U.S. workforce by sector, summarizing its findings in terms of total workforce size, and as a national Unemployment Rate. Jobs are considered a keystone in the continuing U.S. economic recovery. 

More working Americans means:

1. More consumer spending, a boost to businesses
2. More tax collection, a boost to governments
3. More personal savings, a boost to households

For June, analysts expect the government to report 80,000 net new jobs created, and no change in the 9.1% Unemployment Rate.

Although these figures are slightly below than what can be considered "strong growth", that's not what should concern rate shoppers. Mortgage markets react to a deviation from estimates more than to the actual results themselves.

This is because Wall Street placed bets in advance of the jobs report's release. If jobs growth tallies more than 80,000, therefore, it signals better news for the economy than what was expected. This will push banks and investors towards equities, and away from bonds -- including the mortgage-backed kind.

With less demand for mortgage bonds, mortgage rates will rise.

Conversely, if jobs growth is less than 80,000, mortgage rates should fall.

Mortgage rates remain near their lows for the year, but if the June Non-Farm Payrolls report beats estimates of 80,000 jobs made in June, look for mortgage rates to spike. The safe move is to lock today.

What To Know Before You Move To A New Neighborhood

As home buyers , we tend to research homes a lot. We look at square footage; at upgrades; at landscaping; at community statistics; and, at every other "number" on which we can get our hands.

But those are just statistics. What about the home's "feel"? 

In this 5-minute piece from NBC's The Today Show, you'll learn a dozen complementary home-shopping techniques to help you review and evaluate a home for purchase. Each is focused on findings you won't see listed on a website.

For example, instead of scheduling your second showing for the same time of day as your first one, revisit a home during an "opposite" time. if you originally saw the home in daylight, go see it at nighttime. If you first saw a home on the weekend, go see it during the work week.

By seeing a home in two distinct settings, you can get a better feel for what the home and neighborhood are really like.

Some of the other tips from the video include:

1. Visit during Rush Hour and on a Saturday night. This will help you gauge sound levels of the street.
2. Go to Google Maps and study the aerial shot of the home. What's nearby?
3. Talk to neighbors. They'll share everything about the neighborhood with you -- good and bad.

When you buy a home, you committing to more than just the property. You're committing to the neighborhood, too. Armed with the methods described in this video, you'll be better prepared to make a good decision.

This Summer, Cool Your Home For Less Money

According to ENERGY STAR®, the typical household spends close to $2,000 per year on heating and cooling, and up to $600 of those costs are a waste; the result of energy inefficiencies in every U.S. home.

With the hot months of July and August ahead of us , therefore, consider these simple-to-follow, cost-saving tips for keeping your home cool. None are expensive and each can yield quick results.

First, convert your home's light bulbs to to CFLs.

It's well-known that CFL bulbs use less energy than comparable incandescent bulbs, but they also generate far less heat. A "traditional" bulb converts 97.5% of its electricity into heat, which will require extra cooling in your home. CFL bulbs give off heat, too, but at a fraction of the level of an incandescent.

Next, make sure your HVAC air filter is clean. A dirty filter can add up to 7% to your cooling costs because your HVAC unit works harder to move the same amount of air. Change your filters quarterly, at least. If your home has shedding pets, consider changing monthly.

There's other steps you can take, too, including:

1. Keep your shades drawn. By blocking out the sun through your windows, you can lower a room's temperature by as much as 20 degrees. That will require less cooling.
2. Tune your HVAC unit. If you air conditioning unit has not been inspected this year, call a service technician to make sure it's running optimally.
3. Use a programmable thermostat. When you're not home, set your home's temperature to be higher. You don't need to cool an empty home.

And, lastly, use your ceiling fans. A room's temperature can feel up to 8 degrees cooler when a ceiling fan is running. Just remember that the ceiling fan cools you and not the room. Remember to turn it off when the room's not in use.

Get customized cooling recommendations from the EPA.

5-Year ARM Falls To Historic Lows

The interest rate differential between fixed-rate and adjustable-rate mortgages continues to widen and has now reached historic levels.

There's never been a better time to lock an ARM.

According to Freddie Mac's weekly Primary Mortgage Market Survey, homeowners who lock their mortgage rate today will save 129 basis points on rate, on average, by choosing a 5-year ARM as their mortgage product as compared to a 30-year fixed rate loan.

The average 30-year fixed rate is 4.51%. The average 5-year ARM rate is 3.22%.

It's the biggest interest rate spread between fixed-rate and adjustable-rate mortgage rates in Freddie Mac's recorded history; a gap which is the result, in part, of the 5-year ARM dropping to all-time lows this week.

Rates for the 5-year ARM are even lower than during last year's historic Refi Boom.

Putting today's "spread" in action against a hypothetical $250,000 loan size, a homeowner that chooses an ARM over a fixed-rate loan would save $184.30 monthly, and would have $500 fewer closing costs.

That's a 5-year savings of $11,558 -- nearly triple what you would have saved just 2 years ago.

The main reason why today's adjustable-rate mortgages are priced so aggressively relative to comparable fixed-rate loans is that Wall Street expects the economy to drag for the next several quarters, after which it expects an acceleration. 

ARMs tend to reflect short-term expectations for the U.S. economy which is why short-term mortgage rates are dropping.  Fixed products, by contrast, take a longer view and expectations for an economic rebound are pulling fixed-rate mortgage rates up.

For now, mortgage applicants can exploit the difference -- especially those who plan to move within the next 5 years -- but adjustable-rate mortgages aren't right for everyone. ARMs carry particular risks about which you should be aware before locking.

Before you choose an ARM, therefore, talk it through with your loan officer.