Mortgages have always been a little bit confusing. But now, thanks to the housing crisis, there seems to be a growing understanding of how such widespread confusion can lead to huge, huge problems.

So at Texas Lending, we’re out there trying to help people all over the web better understand mortgage rules, regulations and options. Why? It’s simple — we believe that a more thorough grasp of complicated housing and mortgage questions helps everyone — from your housing desires to our business goals to America’s recovering housing market.

Take, for example, one concerned Dallas-Ft. Worth mother. We were helping her through the home buying process, but didn’t do a very good job of communicating with her. So she took her concerns to the web, and sought answers on an online community of Dallas-Ft. Worth mothers .

On the site she wrote:

So I have been speaking to Texas Lending but not sure I am getting a good deal, but I do not understand anything on all these forms I have looked over. Now they want to get an inspector guy out here to get the ball really rolling, but I am not sure. I was told a rate of 5.25 which sound pretty good, and it is on the forms, but then it talks about 6.01..I ask the rep I am dealing with and he said that is our APR and since we are rolling in the closing costs. I say so is it 5.25 or 6.01 since that is thousands difference..well your rate is 5.25 but your APR is 6.01..that makes no sense and that must mean I will be paying 6.01. Then I HAVE to pay mortgage insurance, never have before but this is some fund that you just throw your money away to for 5 years then it stops..why? On the rent home I have I have a 80/20 split to avoid mortgage insurance but I hear now that the 80/20 loans are no more. I know this guy is going to be upset but I need more info and more time…what may be a month commission check to him will cost me thousands over 30 years….If I could just go to someone honest and looking out for my best interest. HELP.

Confusing, right? If this sounds like a question you’ve been asking, contact us. But even if you don’t, we’ll try to get you your answers anyway.

Take 2008momof3′s question, for example. I found her question, and immediately reached out to help:

Hello 2008momof3,

Thank you for posting your question and concerns here. As the owner of Texaslending.com I want to make sure you are fully aware and comfortable of any loan transaction you will sign. Hopefully I can help. Let’s take each topic one at a time.

1. The rate someone pays on a mortgage is almost always different than the APR. The APR is, in almost all calculations, higher than the rate you will pay. While the 5.25% is the interest rate you will pay, the government recalculates the rate into a fictitious APR which includes the cost of MIP, the cost of closing costs from third parties and the costs from the lender, as a % of interest which is added to the rate you actually pay. While some costs are included in the APR, certain fees like title insurance are not included in the APR which makes the APR a bogus calculation but what else do you expect from the government.

The APR will only be lower than the interest rate you pay if the loan is an adjustable rate mortgage and the long term prospects are for the rate to fall. In this case your loan is a fixed rate and the MIP of .5% is added to the rate as well as the closing costs making the APR higher.

2. Since the loan appears to be an FHA loan , which is a loan insured by the US department of Housing and Urban Development, any and all 30 year fixed FHA loans MUST have Mortgage Insurance Premium, paid for at least 5 years, as dictated once again by the government. Depending on your credit score, income and qualifications, FHA vs an 80/15 loan depends on the best deal for you. Since 95% of all home loans are now sold to the Federal Government the best choice for you will depend on which government loan program offers the best terms for your situation. The choices are limited to Fannie Mae, Freddie Mac, FHA, and VA.

3. Please send me your name and contact info to info@texaslending.com, and I will be sure to get you more detailed explanations in file format to explain APR, FHA, etc.

The MOST important thing you need to know is that low mortgage rates have been artificially stimulated to the low side by the federal reserve for the past year and a half. The federal reserve ends this stimulus of low rates on March 31st. Since the interest rate of 5.25% would be the mortgage rate you pay, you will be best served over the next 30 years to lock any rate you choose for your loan as soon as possible as rates are expected to rise anywhere from .5% to 1% by early April.

Thank you again,

Kevin Miller

CEO

Texaslending.com

Please let us know if you have any home loan questions at all. TexasLending.com’s mortgage experts are here to help.