Rate after Initial Discount: While the initial discount seems attractive, it may not be in your best interest to go that route. The key is knowing what the discount will be after the teaser rate is no longer in effect. Sometimes when you average it out over the course of the term, it doesn't work out in your favour. For instance "Lender 1" is offering you a VRM. It's a 5 year term with an initial discount of 1.01% off of prime for the first 9 months. The discount after those 9 months is 0.25% below prime. "Lender 2" is offering you a VRM as well. It's a 5 year term with no initial discount or teaser rate. For the whole term the discount will be 0.75% below prime. When you average it out over the full 5 year term, the true discount with "Lender 1" is only 0.36% below prime, while "Lender 2" has maintained 0.75% below prime. In this example, which is based on actual products available today, a person may think that he or she is getting a great deal by getting an introductory rate through "Lender 1", but in actuality they are getting less than half of the discount that they would receive with "Lender 2".

Payment Options: Some lenders have restrictions on when your payment can be made. This can be a factor in your decision as to which lender to go with. Perhaps you prefer to pay weekly, or bi-weekly? If that's the case, then it's important to know which lenders are flexible with their payment options, as not all lenders are.

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