Not too long ago the world of real estate finance was a fairly simple place. Most loans were so clear that borrowers without advanced degrees in finance could reasonably compare marketplace choices

Those days are gone.

Today simple mortgages such as the 30-year, fixed-rate mortgage still exist, but they're becoming increasingly rare. A report by Standard & Poors shows that in the third quarter of 2006 new mortgage products such as option ARMs and interest-only (I/O) mortgage products represented 80 percent of all loan originations to the best, A-rated, borrowers.

At the same time that loan products have become more complex, there's evidence that borrowers need to know more about their loans. A Federal Reserve study from early 2006 shows that among ARM borrowers:

• 44% did not know how to calculate interest levels for their loans;

• 41% did not know the lifetime maximum interest rate for their loans; and

• 20% did not know their loan's initial interest rate.

Okay, so who cares? As long as lenders put up the money why should borrowers worry about the details?

Because the more borrowers know about their loans the stronger their ability to get the best possible rates and terms.

What should you ask if you're considering an interest-only or option ARM? Here's a checklist of the 20 most important questions to consider:

To view our basic loan checklist, please visit the entire article.