Where should I shop for home loans or mortgages?

Many entities, including banks, credit unions, savings and loans, insurance companies, and mortgage bankers make home loans. Lenders and terms change frequently as new companies appear, old ones merge, and market conditions fluctuate. To get the best deal, it's a good idea to compare loans and fees with at least a half a dozen lenders -- or to get the help of an experienced mortgage broker, who can help you sift through the latest offerings.

Because many types of home loans are standardized to comply with rules established by the Federal National Mortgage Association (Fannie Mae) and other quasi-governmental corporations that purchase loans from lenders, comparison shopping is not difficult. However, you'll need to decide what type of mortgage you're interested in first, whether it's a fixed rate, adjustable rate, or one of the many hybrids available now. Once you've narrowed your sights to a particular size, type, and length of mortgage -- such as a 30-year fixed term mortgage for $300,000 -- you'll be ready to compare apples to apples.

Mortgage rates and fees are usually published in the real estate sections of metropolitan newspapers, and on online mortgage websites. It's wise to do some advance research even if you decide to work with a loan broker, so that you'll have a sense of the market. Some loan brokers charge the consumer directly, others collect a fee from the lender (though this ultimately adds a little to what you pay for your mortgage).

Be sure to check out government-subsidized mortgages, which offer both no-down-payment and low-down-payment plans. Also, ask banks and other private lenders about any "first-time buyer" programs that offer low-down-payment plans and flexible qualifying guidelines to low- and moderate-income buyers with good credit.

Finally, don't forget private sources of mortgage money -- parents, other relatives, friends, or even the seller of the house you want to buy. Borrowing money privately is usually the most cost-efficient mortgage of all. And its popularity is increasing as investors turn to real estate as a high-appreciation place to put their money.