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Pure fixed rate comparisons are easy. A fixed rate of 6.5% will cost more than a 6.125% loan each year and over the life of the loan. But to properly compare effective rates, use the Annual Percentage Rate (APR) which considers all closing costs for a particular loan and will be shown in the federal Truth In Lending (TIL) statement required to be given to you within 72 hours of you submitting an application. Unlike most other installment loans, the stated rate of a mortgage is also its true rate. However, closing costs can affect the effective rate you will pay. Therefore, for a real comparison, you must include the closing costs as a factor in the true interest rate for the loan. You must look closely at the APR for an ARM as the effective rate can be very different from the start rate, depending on the frequency of rate adjustments, the index and margin, and the adjustment and lifetime caps on the loan.