You’re shopping for a mortgage and you’ve received four offers from four lenders. How do you choose? The first factor most people consider is the interest rate and other costs, but that’s only the beginning. You’ll also want to think about the lenders themselves, not simply the numbers they’re tossing your way.

Here are five steps to follow when determining which lender is right for you:

1. Compare fees as well as interest rates
Comparing loans based on their annual percentage rate (APR) is a good place to start, but it’s not enough. In the case of a mortgage, to get a more accurate breakdown of costs, ask the various lenders for a formal “good faith estimate” of all the fees you’ll incur with your loan — this is a standard form lenders must provide you that is more detailed than the overview you’ll get with an offer. Also, ask about potential charges that may not appear on that list, such as prepayment penalties. You’re not just comparing numbers here: determine how honest and upfront you feel the lender is being, and don’t use a lender that you feel is evading your questions.

2. Consider your individual circumstances
Bigger lenders aren’t necessarily better than smaller ones, especially if you have unusual circumstances. For example, some lenders specialize in loans for people with poor credit, while others may have more options for those with small down payments. If you have special borrowing needs, look for a lender with experience working with people in similar situations.

3. Look at the range of loan types available
There are more loan options available than ever before, so take advantage of all that choice. Look for a lender who offers a wide variety of loan types, from conventional fixed-rate and adjustable-rate to newer ones such as hybrid ARMs and option ARMs. Your lender should be able to match you with a mortgage that’s right for your financial situation and risk tolerance.

4. Evaluate the level of customer service
When you’re comparing offers, ask each lender about their policy regarding locking in their quoted rates and see whether there is a fee. Also, ask them to amend one of the terms (such as a payment cap) and see how willingly they agree. You’re looking for flexibility and responsiveness. And also note how well they listen to you. If you ask for a 30-year fixed-rate mortgage, they ought to present that as an option, not push you toward something different, such as an interest-only loan. If you’re not getting good service from a lender who is competing for your business, you’re not likely to get it after you’ve agreed to work with them.

5. Check out the lender’s reputation
Word of mouth is important in every business, including the loan market. If you’ve never worked with a particular lender, you’ll want to find out the opinion of people who have.

Call it three birds with one stone: The federal government hopes simultaneously to help low-down-payment homebuyers, investors who fix up foreclosures, and local communities burdened with too many bank-owned and foreclosed homes – all with one potentially far-reaching policy change.

The Federal Housing Administration – better known as FHA – is revising its long-standing “anti-flipping” rules starting Feb. 1, and just might score a hit with all three target groups. For years the FHA has had a strict prohibition: It wouldn’t insure a mortgage on a house where the seller had owned it for less than 90 days. The ban was a reaction to fraudulent quick flips of houses that inflated their values far beyond true market worth.

The flips often were pure cons: Buyer A would acquire a low-cost house in bad repair, do minor cosmetic changes and resell within days to Buyer B, who was also part of the scheme, at a significantly higher price. The sequence could involve a string of serial flippers within a month or two, and trumped-up prices spiraling into the thousands.

The end game usually went like this: Find a hapless purchaser for the flipped house who would apply for a low-down-payment FHA loan. Typically that buyer defaulted quickly – leaving FHA with a foreclosed house on its books, and a loss to its insurance funds.

FHA maintained its 90-day anti-flipping rule through much of the last decade. But now it’s suspending the policy, at least for the next year. In an advisory to lenders, FHA Commissioner David H. Stevens said the agency will once again provide mortgage insurance for some purchases where the seller had closed on the property less than 90 days earlier.

The objective, said Stevens, will be to speed up sales of renovated houses to first-time and other purchasers. With foreclosures at record levels – an estimated 2.8 million filings last year alone – many communities are faced with excesses of bank-owned properties sitting unsold, often in poor repair.

By waiving the 90-day rule, private investors will be more likely to bid on these houses, fix them up and sell them to buyers who will now be able to gain early access to FHA financing, which offers 3.5 percent down payments.

What’s the significance of the 90-day timeline? It’s huge, say investors who specialize in acquiring and renovating foreclosures and bank-owned properties. Paul Wylie, an investor active in the Los Angeles area, says his group generally can acquire and rehab a house and list it for resale within 60 days.

But under FHA’s previous policy, large numbers of potential purchasers couldn’t bid on Wylie’s properties as soon as they had hit the market. Barred from using low-down-payment loans until after 90 days, these buyers were forced to look to conventional mortgage sources, which often required 10 percent down plus private mortgage insurance.

“A lot of the people who want to buy our houses just don’t have 10 percent,” said Wylie in an interview. “But they can afford a 3.5 percent FHA down payment. ”

Bobby Taylor, a broker with Coldwell Banker Mountain West Real Estate in Salem, Ore., said FHA’s change of heart “is going to be absolutely terrific” for anyone looking to bid on a moderate-priced post-foreclosure house in good physical condition. Some lucky buyers will even be able to combine the $8,000 federal tax credit with 3.5 percent FHA financing – provided their contracts are signed by April 30 and closed by June 30, when the credit program expires.

FHA’s revised policy does not throw open the floodgates to all post-foreclosure renovations, however. Stevens laid down two key restrictions designed to protect end buyers and FHA alike:

• There can’t be game-playing or conflicts of interest among buyers, sellers, realty agents or others involved in the deal. “All transactions must be arm’s-length, with no identity of interest” among any of the participants.

• Price run-ups must be relatively modest and justifiable from the time of the investor’s acquisition to what’s paid by the applicant seeking FHA financing. Generally the limit will be 20 percent.

When the price jump exceeds 20 percent, FHA expects participating lenders to require extensive documentation of the renovation expenditures made by the investors to justify the hefty price increase. Lenders also are required to order an independent property inspection so the purchaser can understand the house’s physical condition and the improvements made.

The takeaway for buyers and investors: Check out FHA financing early in the game on foreclosure turnarounds. It’s now available and it just might work for you.

Clarification: To qualify for the $6,500 housing tax credit, purchase contracts may be signed before Nov. 7, 2009, provided the closing occurs after that date. Last week’s column said purchase contracts must be dated Nov. 7 or later.

Visitors, Facebookers and Twittererers lend me your thoughts!

My bet is that there are a number of you out there who are buying and/or selling a home right now or at least considering jumping in to the market and I am curious about a few things:

1. If you are currently in the buying/selling process:
   • What was your motivation to get in?
   • How are you finding the process?
2. If you want to get in but haven’t yet is there something specific you are waiting for before you get in?
3. Do you know about the expanded home buyer tax credit?

My REALTOR, Investor and Mortgage friends are happy to join in with a couple constraints. Please keep it clean (duh), please do not attempt to overtly solicit business. If you give good advice then people may choose to contact you.

To comment, you can use your Facebook or Twitter ID. I am not collecting names, just your thoughts. You won’t be added to any mailing lists.

Thanks!

Consider this an open thread…

Foundation repairs run the gamut from simple DIY fixes to major reconstruction. Here’s what you need to know about your options, and when to call in a pro.

Fixing foundation problems should be a priority for every homeowner. Foundation repairs prevent little problems from becoming bigger, keep your home safe, and protect the value of your property. Fortunately, foundation problems tend to develop and worsen slowly, giving you time to make a thorough evaluation and decide on the proper course for repairs.

Narrow cracks

Cracks less than 1/4-inch wide require the easiest foundation repairs, especially if they’re located where concrete tends to crack naturally from shrinking as it cures. You can probably leave these cracks as-is. But if water is seeping through or you’d like to seal cracks for cosmetic reasons, apply a good-quality, paintable silicone caulk or epoxy putty.

Wide cracks

Horizontal cracks, vertical cracks wider than ¼-inch, or stairstep cracks in blocks or bricks tip you to more serious problems. You can hire a contractor to plug deep cracks by injecting epoxy ($1,500-$3,000), or do it yourself with epoxy putty, but either way, you’ll only be stopping water from coming in.

Patching cracks won’t make your house level again or stop whatever forces caused the cracks in the first place. “Patching cracks is like putting on a Band-Aid,” says Jim Hise, owner of Expert Basement Repair in Cleveland. To heal the wound, you need to fix the underlying problem.

Basic foundation repairs

A common culprit is water accumulation in the soil around the foundation, which expands the soil and puts pressure on walls and foundation footings, causing cracks to appear. Check to make sure all gutters and downspout drains are in good working order, and that the soil around your foundation is properly graded—it should slope at least 6 inches for every 10 horizontal feet.

Most foundations are required to have a perimeter drain system that channels sub-surface water away from the foundation. The drain system is made of concrete tiles or perforated plastic pipe buried in a gravel bed. It usually drains externally (a pipe that opens onto a low spot in your yard), or connects to your sewer system.

It’s possible for this drain to become blocked, causing water to accumulate in the soil and putting pressure on your foundation walls. If you suspect a blocked perimeter foundation drain, seek the advice of a licensed foundation contractor.

Buckled wall and severe cracks

A perimeter foundation that has tipped, bowed, or severely cracked requires substantial reinforcement to prevent further deterioration. Repair the walls from the inside with wood or steel braces, carbon-fiber mesh, or wall anchors spaced 6 feet or so apart along the entire wall.

For about $500 to $700 each, wood and steel braces install against the wall and attach to the floor and overhead joists, blocking further movement. However, they intrude into the basement area about 6 inches, making it difficult to finish the walls. A newer option, which costs less than half as much and winds up almost invisible, involves spreading epoxy in vertical strips and then pressing on carbon-fiber mesh to lock the wall in place.

Wall anchors are similar to large bolts. They consist of metal plates in your yard (installed by excavating), and metal plates on the inside of your foundation walls The plates are connected by steel rods buried horizontally. The connectors are gradually tightened to stabilize and help straighten the wall. Wall anchors are placed every 6-8 feet, and cost $400-$600 each.

If a foundation wall bows severely (more than 3 inches) or if you want to make it straight again, you probably won’t be able to fix the problem from the inside. You may need to excavate part or all of the foundation and rebuild it—a $30,000 to $40,000 job.

Washed-out areas

If a broken water pipe, a plugged gutter, or a drainage problem in your yard sent enough water cascading alongside a perimeter foundation to undermine an area, a contractor might be able to shore up the area with more concrete or shim the sill plate to make the area level again. Or you might need to tear out a section of the foundation, repour, and tie the new section into the old with rebar and epoxy.

Simple fixes with concrete and lumber might cost as little as $500 or as much as several thousand dollars. Just be sure that the underlying cause is fixed first, or the repair won’t last.

Foundations and expansive soils

If your house is out of kilter and there is no obvious reason, it may sit on soil that expands when damp and shrinks when dry. This so-called “expansive soil” is found in all states and has damaged about a quarter of all houses in the U.S., according to the American Society of Civil Engineers. If you suspect you have the problem, check with your local building authority to see if expansive soils exist in your area.

Dealing with this kind of soil is most difficult if you have a slab foundation because access is to underneath the slab is limited. First, try to reduce moisture fluctuations under your house. Make sure soil slopes away from the house, and pipe away all gutter water. Replace water-thirsty landscaping within 5 feet of the walls with plants that need little water or, even better, install a concrete path around the house so rainwater can’t soak in there.

If you live in a damp climate and notice settling issues such as sticky doors during droughts, try the opposite approach. Keep the soil evenly moist by running drip irrigation around the perimeter during dry spells. If you see cracks in the soil, it’s too dry. But don’t dump water into a crack; irrigate a foot or two away from the foundation, and use an automatic timer so you add a little water several times a day rather than a lot all at once.

A contractor may be able to raise a sunken area in the middle of a room by “mud-jacking,” or pumping a cement slurry under the slab under pressure. Mud-jacking can’t raise load-bearing walls, however. For that, you need to support the slab with underpinning that reaches down to a more stable layer, a fix that costs $5,000 to tens of thousands of dollars.

Options for underpinning include steel posts driven in hydraulically, and helical piers, which have blades that screw into the soil. Installation costs $1,200-$1,500 per pier, with one every 6 to 8 feet. Another option consists of pre-cast concrete pieces about 1 foot high that are pressed down on top of each other by the weight of the house, creating columns underneath.

Contractors tend to specialize in a single solution and often are quick to point out problems of other systems. That’s why it is so helpful to have a structural engineer’s guidance. In truth, the best option varies according to the circumstances.

Working with a structural engineer

Trustworthy advice comes from a structural engineer. An initial visit (about $500) should reveal the severity of your problem and tell you what to do next. If you need a full engineering report, expect to pay several thousand dollars. You might also need a soils engineer and core samples, doubling the cost.

In the end, you should get a written report that makes specific recommendations and lays out pros and cons of each option. If you need a complicated fix, you might want to hire the engineer by the hour ($100-$200) to inspect while work is underway.

Free estimates from foundation-repair contractors make sense if you live in a neighborhood where one solution has succeeded in similar homes. “Get two or three bids and see if you get a similar pattern of suggestions,” recommends Richard Morant, operations manager of Dawson Foundation Repair in Dallas. If the advice isn’t consistent, call a structural engineer with no vested interest in a specific solution.

REALTORs hear this question quite often, either directly or they overhear the question being asked of another agent. The most common answer is something along the lines of “there just hasn’t been anyone calling or coming to open houses.”

Many agents are always looking for the elusive, and sexy “double pop,” meaning that they have procured a buyer for their own listing. It’s profitable since the agent gets paid for both sides of the transaction, plus the bragging rights are pretty nice, too.

But the agent working mainly to bring buyers through their listing in hopes of a double pop are doing their sellers a great disservice. The listing agent’s main job is not to market directly to the buying public, but rather to market to the thousands of REALTORs in your area. It’s simple math, why market towards a handful of people when you can market to thousands of agents who may each have more than one buyer for your home?

This fact also nullifies the attractiveness of flashy ads in newspapers and magazines, especially since over 90% of buyers find their homes online. Of those 90%, many will receive information about your home from an automatic email or listing portal which another agent has set up for them. A good listing agent will make sure that your home is the most appealing to those online buyers as well as making sure that the agents in your area know all about it.

Once your home is listed, your agent should get it out there to at least their local offices. A good listing agent will let other top agents in the area know about it either through flyers mailed or dropped off or email (which is the best way). Did you change your price? Maybe put up some new photos? Make sure you have an agent who will let all the agents who have previously shown it know about it – if not the list of your area’s top agents, as well! Your agent should be putting your listing in front of these agents at every possible opportunity – without overdoing it, of course!

When you list your home for sale, you should choose an agent who is very thorough and finds out everything he or she can about your house and who researches your price range and suggests pricing that will place you favorably within your range. Since all fields on an MLS sheet are searchable, your agent should have each field filled out completely and accurately.

Most broker websites now feature things like narrated virtual tours and 180- or 360-degree panoramas which are great tools to attract buyers since they give the buyer a better idea of your home. But, does your agent link to these in the MLS system where most buyers wil find them? They better! The Milwaukee Metro MLS system allows links to both Virtual Tours and property videos.

And not to get on my photograph soapbox again, but your agent should include as many photos of your property as their local MLS allows (for the Milwaukee Metro MLS that is a total of 25). In just the last two weeks I have spoken to people who have told me that no pictures, not enough pictures or just bad pictures will cause them to reject a listing. Don’t let that one be yours!

A good listing agent will do all he or she can to bring a steady stream of agents and their buyers to your door and may never show your home once. A good part of what we do happens behind the scenes.

When interviewing an agent to list your home, be sure to find out what they do to market your home to other agents because that is the best market for your home.