Protect yourself.
Easiest way to shop for the deal -
Indentify how long realistically you'll keep the home. No use insisting on a "30 year fixed" if you know for a fact you'll be leaving in 5 years. Although the 30 / fixed is America's sweetheart, it's also the most expensive loan out there. Consider an ARM if a change in owenership is a possibility in the forseeable future.
Expect higher interest rates and payments if you have less down. Don't be an idiot who thinks that a guy with -0- down is entitled to the same rate as the guy who puts 35% down on a home. Same with credit, bad credit = higher rates. Banks translate higher risk with higher rates. Less you put down, expect a higher rate. Period.
INSIST ON A GOOD FAITH ESTIMATE, AND A TRUTH IN LENDING WITHIN 3 DAYS OF SOMEONE PULLING YOUR CREDIT. This is important. This is a legal, written record of what you were quoted based on your credit, estimated downpayment, and the exact term of the loan. If your loan officer doesn't issue this to you, you in fact have NO written record of what you were quoted and now are open to getting your rate and fee jacked up since you don't have proof of what you were offered. This is serious.
If, after the initial quote, the bank determines they cannot offer you a loan based on those terms for whatever reason, they are to reissue a new good faith estimate and truth in lending stating the NEW terms of the loan before you go into signing. If they do not have your signature on the new estimate before you sign your loan, acknowledging that in fact, you are aware of the new fee / rate whatever, you have grounds to claim "predatory lending" - in simple terms, they never gave you adequate notice that you are not eligible for what you originally were quoted.
This is what protects you from getting your fees or rate raised at last minute. They have to demonstrate they have made a reasonable attempt to notify you PRIOR to you signing docs that you have a new rate / fee whatever due to a change.
Don't assume that a big brand name bank is going to be always better than a smaller brokerage. Bank is one of the WORST places you can get a loan. A competent broker will lay waste to a brand name lender.
A BANK, A MORTGAGE BROKER, AND EVEN CREDIT UNIONS ALL SELL TO THE SAME INVESTORS, THEREFORE THERE ARE NO DIFFERENCES BETWEEN RATES AND COSTS. The actual rates and the fees to get that rate are largely dictated by the investor, so the guy at Bank of America gets basically the same pricing as the Mortgage Broker at Seattle America One Finance
. Don't fall for that BS that "were big brand name bank so there's no middleman!!" That is 100% bull$****.
Bank of America for instance always prices their loans with 1% profit from higher rate, and 1% profit from you, the borrower. In other words, they ALWAYS make 2% origination on every loan they write. This is their corporate policy. A broker can do this for less since they don't have to answer to anyone for what they charge - just whatever the guy writing the loan feels is fair.
Remember, it's just a matter who's willing to charge the lesser cost to get that rate.
One last note on fees. - concerning "points" - as much as you can pay the bank points for a lower rate, a bank can pay YOU points for accepting a higher rate.
Ever seen a "free" loan? Those no fee loans that banks sometime peddle? - those rates are so high, that the bank is willing to pay all the fees since they are paying so many points to YOU for the loan. Yes, if you accept a high enough rate, the bank can actually pay some of those closing costs for you.
Great deal if you plan on selling the property in the near future.
Frankly, I'd stay away from the bigger banks, and find a reputable broker in the area who's mature and can qualify you. Check between 2 - 3 brokers, and maybe one local bank and see what fits the best. Don't go crazy shopping every guy in town, remember that they all have the same investors, so all the offerings will be similar. All that shopping pulls your credit scores down too.
Talk to the loan officer, only talk to the guys who sound intelligent, and / or have a good referral.
Good luck
rjp