You need more than the annual percentage rate (APR) to really get to know your mortgage.

While the APR will help you compare the APR of one mortgage with another, it won't come clean on other home loan and financial characteristics you'd better know before you're married to the terms of a mortgage.

Your home loan comes with the note or actual interest rate, but that's only one of the costs associated with your mortgage.

Quicken Loans says the APR includes both your actual interest and any additional costs or prepaid finance charges you might finance, such as prepaid interest, private mortgage insurance, closing fees, points, etc.

The APR represents the total cost of credit on a yearly basis after all charges are considered. It's typically slightly higher than your actual rate because of the added on items.

The APR was mandated by federal law to help borrowers compare costs from one mortgage to another, but in today's messy mortgage market, like outdated disclosures, it falls far short of revealing a loan's true colors.

Barry Habib, CEO of the Mortgage Market Guide says consumers who fall in love with a mortgage based on its APR alone could be in for some heartache.

"The problem is that APR calculations (and by extension, you) make some very bad assumptions," Habib said.

• The APR assumes zero inflation, that the value of a dollar today will be the same value 10, 20, even 30 years down the primrose path. That's obviously not the case. Thirty years ago, the cost of a gallon of gasoline was about 65 cents, according to the Department of Energy.

• The APR assumes the mortgage will never be prepaid or paid off early, but the average lifespan of a mortgage is from five to seven years by most accounts. Homeowners dump mortgages because they move on, up, down or out.

• The APR doesn't consider the value of the money used for fees.

  "If you spent thousands of dollars in points or fees to get a lower rate, the APR calculation doesn't give any value to the money if it wasn't spent on closing costs," he adds.

  You could be better off investing in oil futures.

• The APR does not take tax consequences into consideration. "This can be significant, because higher fees on the mortgage may not be deductible, while the higher interest rate typically is deductible," Habib said.

A more holistic approach is a better joining of you and your mortgage.

The best way to get to know a mortgage may be with the help of someone who can really show you get to know a mortgage's true personality as it fits your financial needs and lifestyle.

"The bottom line is that borrowers should forget about APR and think twice about those low advertised rates when they're accompanied by higher fees," advises Habib. "They need to look at the big picture, and they need to look at it realistically with an eye on the future. A little homework goes a long way when choosing a mortgage. It can mean the difference of thousands of dollars every time they buy or refinance," says Habib.

So how do you find someone who isn't trying to play mortgage matchmaker, but is honestly looking after your best interests?

Ask family, friends, co-workers and others you trust, who've recently had a positive relationship with a home loan, to refer you to a broker, loan officer, lender, even financial planner or advisor.

Seek help from social service agencies, community groups, housing agencies and others offering loan counseling services.

Educate yourself.

Published: October 25, 2007

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.