Now, start getting bids. The Federal Reserve Board has detailed information about loan providers, such as commercial banks, credit unions, and companies that deal only in mortgages at www.federalreserve.gov.
You can even print out a handy mortgage worksheet that details all the critical questions to ask lenders, such as whether you'll be required to get private mortgage insurance (PMI) and how much you'll be expected to pay in closing costs.
Once you get a few bids, go to OfferAngel.com.
The new, free service defines in plain English the terms of the various loan offers you've received and provides side-by-side comparisons. For $24.95, an analyst puts together a more detailed report that explains how the terms apply to you and your financial goals, and he or she will alert you to potential red-flag items like hidden fees and payments that fluctuate or increase over time.
OfferAngel.com was co-created by Meg Burns, a former mortgage loan officer who left the business after being frustrated by financial-services companies that offered unclear, incomplete, or misleading information about the loans she was trying to obtain for her clients.
Because government regulations about term disclosure have not kept pace with the number of mortgage products on the market today, Burns says the onus is on the borrower to guard against being taken advantage of. "There are many details about your loan that lenders are not required to tell you unless you ask," she says. OfferAngel.com does not recommend lenders or push one offer over another, nor does it share or sell borrower information. "We simply put all the information in consumers' hands so they can make informed choices," says Burns.
If you feel overwhelmed at any point during your loan search, the federal department of Housing and Urban Development (HUD) has a nationwide system of housing counseling agencies that provide free assistance. Visit www.hud.gov
to find a counselor near you. Beware that many for-profit companies will attempt to extract a fee for the same sort of service that HUD provides gratis.
A little advance research online can save you headaches—and potentially thousands of your hard-earned dollars—down the road. "A lot of people get lured in by things like really low teaser rates," says Kathleen Day, a spokesperson for the Center for Responsible Lending. "What they don't understand is how much they're going to pay over time."