Kim Jackson and her husband, Ken, have spent the last four years renting a house just outside of Atlanta. During that time, they've had two kids, changed jobs, and outgrown their rental. The Jacksons know just where they want to live and how much money they can put down on a new house and still live a good life. They’re smart shoppers, in no need to rush into a purchase. You might say the Jacksons have discovered one of the best-kept secrets of homebuying: Finding the right lender or broker is as important as finding the right home. The right lender or broker can save you money over the lifetime of a loan, not just by providing or finding the best possible interest rate but also by making sure that the specific mortgage product is the right one for your family's long-term financial needs. (See Mortgage.com's articles on different mortgage products and features.)

So how do you find a lender or broker you can trust? Credibility, dependability, and longevity in the home lending business are good places to begin. Start with credibility. It's not easy to know if the prices quoted by lenders are reliable. Some will quote you precise, competitive rates, but others will claim low rates to bring in customers or tell you that the rates offered by competitors will change as you get closer to locking-in your mortgage. Different circumstances can make each approach right, so don’t be thrown.

Here’s where dependability matters. You want a lender or broker to deliver on what they promise. It’s not just a question of who has the lowest rate, but who can work with your financial needs to find the right mortgage product for you. The best way to gauge a lender’s dependability is to shop. Get a good grasp of the lingo – become an educated customer who can throw around terms like PMI, LTV, 10/1, and Interest Only (I/O) with ease. Learn the differences between fixed rate and adjustable rate mortgages (ARMs), about how different terms (lengths) and mortgage features can affect the price. Get complete breakdowns of actual dollars in closing fees and other potential costs from each lender. Consider whether paying points to buy down the interest rate makes financial sense for your situation. But look closely at how the math is being done—and what fees are being added to your mortgage. Indeed, shop the fees and rates together.

Both banks and brokers have their strengths and weaknesses. Brokers work with many mortgage bankers and, as a result, can sometimes find slightly more competitive rates—perhaps one-eighth of a percent lower—but dealing directly with a mortgage banker can move a loan along more quickly. Depending on your situation, that may make a bank loan more appealing than a mortgage processed by a broker, although most mortgage experts say that rates are pretty much the same wherever you go, give or take this tiny percentage.

Your buying business isn’t complete until you’ve gone through the process of filling out a 1003 (say Ten, Oh, Three) form (the basic loan application form developed by Fannie Mae and Freddie Mac and used by most banks and mortgage brokers). Once you do, by law, you will receive a Good Faith Estimate and TIL (Truth in Lending) disclosure from your loan officer—an official estimate of your closing costs and cost of your credit in chart form—within three days of providing your loan application. This is your lender’s estimate of what it will cost you to close including the Annual Percentage Rate (APR)—the cost of money borrowed in a percentage rate, inclusive of all fees. Here as elsewhere, use caution in accepting any figures that aren't specific to your situation.