Locating a Lender

Whether you do the footwork on your own or hire someone competent to help you doesn't matter. But you must make sure that this comparison shopping gets done. Suppose that you're in the market for a 30-year, $100,000 mortgage. If through persistent and wise shopping you're able to obtain a mortgage that is, for example, 0.5 percent per year lower in interest charges than you otherwise would have gotten, you'll save about $14,000 over the life of the loan (given approximate current interest rates). Double those savings for a $200,000 mortgage.

Although we encourage you to find the lowest-cost lenders, we must first issue a caution: Should someone offer you a deal that is much better than any other lender's, be skeptical and suspicious. Such a lender may be baiting you with a loan that doesn't exist or one for which you can't qualify.

Shopping on your own

Many different types of companies offer mortgages today. The most common mortgage originators (as they are known in the business) are banks, savings-and-loan associations, and mortgage bankers.

If you've done a good job selecting a real estate broker or agent to help you with your home purchase, for example, the broker or agent should be able to rattle off a short list of good lenders and mortgage brokers in the area. Just remember to compare these lenders' rates with the rates of some other mortgage lenders that you find on your own.