Homework

Do Your Homework
Contact several lenders—and be very careful about
dealing with a lender who just appears at your door,
calls you, or sends you mail.
Ask friends and family
for recommendations of lenders. Talk with banks,
savings and loans, credit unions, and other lenders. If
you choose to use a mortgage broker, remember they
arrange loans but most do not lend directly. Compare
their offers with those of other direct lenders.
Be wary of home repair contractors that offer to
arrange fi nancing. You should still talk with other lenders
to make sure you get the best deal. You may want
to have the loan proceeds sent directly to you, not the
contractor.
Comparison shop. Comparing loan plans can help
you get a better deal. Whether you begin your shopping
by reading ads in your local newspapers, searching
on the Internet, or looking in the phone book, ask
lenders to explain the best loan plans they have for
you. Beware of loan terms and conditions that may
mean higher costs for you. Get answers to these
questions:
Interest Rate and Payments
What are the monthly payments? Ask yourself if
you can afford them.

What is the annual percentage rate (APR) on the
loan?
The APR is the cost of credit, expressed as
a yearly rate.
You can use the APR to compare one
loan with another.
Will the interest rate change during the life of the
loan? If so, when, how often, and by how much?
Interest Rate and Payments