Here is my collected wisdom after the 3rd time I have had to choose a mortgage loan:
 

  • Decide how much cash you can comfortably spend toward the downpayment (for me, it has always been less than 20% of the total cost)
  • If less than 20% downpayment, you have to either get PMI or a second loan–I recommend the second loan
  • Now you want to find the best loan package you can (primary loan, second loan, fees, rates)–I like the primary loan at a 30-year fixed rate and the secondary loan at 15-year fixed with “straight amortization”–in other words at the end of 30 years the primary loan is paid off, and after 15 years the seondary loan is paid off, assuming you make no extra principal payments.

  • Get at least 3 good faith estimates (GFEs) from mortgage brokers recommended to you and also go on the internet (lendingtree.com, bankrate.com, etc.)
  • Comparing the GFEs is much easier if the primary loan rate is the same–so take the lowest quoted rate and then tell the other mortgage brokers to do whatever it takes on fees for them to get to that rate–most likely they will increase the origination fee or other fees.
  • Once you have all the GFEs at the same loan rate, you can compare them better, especially focus on the fees in the 800 range located at the top of the GFE–these are the ones the broker has the most control over
  • Scrutinize each GFE then go back to each broker asking them to improve their deal by telling them how they are higher in whichever area they are higher in (origination fee, discount fee, broker fee, underwriting fee, etc. etc.)
  • After they come back again, check the estimates and choose the best one. Make note of the secondary loan rate as well–they won’t put it on the GFE and you should ask them what rate they are charging you and find the lowest second loan rate quoted to you then tell the broker you are selecting you want him to match that second loan rate. $5 dollars per month doesn’t seem like much maybe, but it’s $60 per year over 15 years–$900
  • Ask St. Joseph to pray for you!

 
I hope my small wisdom is helpful to you. The brokers I have worked with are good people, but they make their money off of how much they can charge you over what they buy from the big investors/mortgage houses, kind of like car salesmen, so even with honest men you have to do your due diligence in making them compete for your business.

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