Homeward bound: how to navigate and understand mortgages.

• Author: Sutherland, Spencer
• Position: SPECIAL SECTION: BANKING & FINANCE

It feels like no matter where you turn, there's someone looking to get you into a new mortgage. With TV commercials advertising completely-online loans, billboards boasting mortgages with no closing costs, and pushy neighborhood loan officers trying to get you to refinance your house, there is no shortage of options. But how do you know which are good deals and which are just too good to be true?

A post-recession era

Understanding today's mortgage climate requires a quick look at the past.

"I'm really not exaggerating when I say almost everything has changed since 2007," says Teresa Whitehead, CEO of Citywide Home Loans. For those with a short memory, 2007 was when the real estate bubble not only burst, but exploded with such force that it helped create the Great Recession. Pre-2007 mortgages were often issued quickly and recklessly, allowing borrowers to qualify for loans they couldn't really afford.

There are now a slew of regulations to prevent that from happening again. Underwriting criteria has tightened significantly, and lenders are now required to give borrowers a settlement statement that shows all loan costs four days before closing.

"The odds of you getting in over your head are now significantly less they were back then," Whitehead says.

Though the added regulations are good for consumers, they tend to slow down the process. Loans that may have closed in two weeks before the recession now take 30-45 days to complete.

The most significant change from a decade ago is that interest rates have largely been standardized. According to Whitehead, "Rates don't vary as much lender to lender as they once did, and programs and products are all very much the same."

Too good to be true?

Despite most lenders offering the same interest rates, there always seems to be a few who are offering better deals. Justin Brown, senior mortgage strategist at Security National Mortgage, says there are a few explanations.

The first is that some advertised prices only reflect the interest rate, rather than the annual percentage rate (APR) which accounts for all fees associated with the loan. "Everyone wants the lowest rate, but it's important to understand the full cost," Brown says. "If you're paying higher closing costs or buying points to get a lower interest rate, you may end up paying more in the long run."

Another reason some rates are so low is because they reflect the exception, not the rule. "That low advertised rate may technically be available,"...