Choosing a Lender

Your buyer's broker can help you determine the best lender for you. They're familiar with many local options, and they have experience ferreting out potential hidden charges and helping you make true comparisons of fees and interest rates.

In particular, make sure you understand all the closing costs. The FDIC has a worksheet that outlines typical closing costs and other fees. Your buyer's broker can help explain anything that needs clarification.

They can also offer additional resources, like this helpful article from the Realty Times and this Glossary.

Types of Lenders

There are many mortgage sources available today:

• Banks
• Credit Unions
• Mortgage Brokers
• Online Lenders

Banks and Credit Unions: Start Local

Your best bet is to investigate your local lenders -- and any financial institutions you already have an existing relationship with. Local lenders (including local savings banks and credit unions) are familiar with the local marketplace they serve. They also generally use local appraisers -- which is important because local appraisers already have familiarity with the area, and the appraised value of a property will determine the loan amounts available for the mortgage. The decisions on loan applications are most often made locally -- and that can make a difference in the time it takes to get a mortgage approved and underwritten.  The local angle can offset the advantages bigger lenders can seem to offer you.

Mortgage Brokers

Today using a mortgage broker can be a safe and reliable source for mortgage financing. It is important to be vigilant and to do your homework. Mortgage brokers are not direct lenders: They actually work with several sources of direct lenders to find you the mortgage product that can best suit your needs. They often can provide a wider range of mortgage products than your local lender may provide -- some times at better interest rates.

But it is important to pay attention to the fees mortgage brokers charge, because this is where what appears to be a good deal can actually end up costing you more. Mortgage brokers are compensated by the lenders they place mortgages with and the fees they get paid can vary based on the different kinds of loans they sell and the interest rate charged. So it is important to shop around to find a reputable mortgage broker, one that is not just trying to make the most they can on your mortgage but is truly trying to find you the best mortgage product at the best price they can. (As in every business, there are reputable and disreputable people in this industry -- and that is also true of local lenders.)

Online Lenders

Online brokers like Lending Tree, Ditech.com and others are also options -- but, again, you must pay attention to the fees and interest rates and shop around. One of the biggest complaints about these types companies is that they often use appraisers that are from out of the area. This can be problematic, because real estate values can vary widely from area to area. Real estate markets and their valuations are inherently local in nature: An appraiser that is not familiar with a local market can miscalculate value.

When you start crunching all these numbers, you'll be very glad you have the guidance of an experienced buyer's broker!

This web resource will help you better understand what a buyer's broker is -- and how they can save you time and money.

Note: The terms "buyer's broker," "buyer's agent," and "buyer representative" are used interchangeably on this site. Different locales use different terminology for the same idea: a real estate professional who represents you -- the buyer.