Shopping around for a home loan or mortgage will help you to get the best financing deal. A mortgage, whether it's a home purchase, a refinancing, or a home equity loan, is a product, just like a car, so the price and terms may be negotiable. You'll want to compare all the costs involved in obtaining a mortgage.

Shopping, comparing, and negotiating may save you thousands of dollars.

Mortgage financing options are much more diverse than many borrowers think. There is a wide variety of mortgage products available including: fixed rate conventional mortgages, adjustable rate mortgages (ARM), FHA loans, VA loans, interest-only mortgages, jumbo mortgages, two-step mortgages, balloon mortgages, assumable mortgages, construction mortgages, no down payment mortgages and seller financing.

When shopping for a home mortgage:

• Research current interest rates. Check the real estate section of your local newspaper, use the Internet, or call at least six lenders for information.



• Check the rates for 30-year, 20-year and 15-year mortgages. You can save thousands of dollars in interest charges by getting the shortest-term mortgage you can afford.



• Ask for details on the same loan amount, loan term, and type of loan from multiple lenders so that you can compare the information. Be sure to get the Annual Percentage Rate (APR), which takes into account not only the interest rate but also points, broker fees, and other credit charges expressed as a yearly rate.



• Ask whether the rate is fixed or adjustable. The interest rate on adjustable rate mortgage loans (ARMs) can vary a great deal over the lifetime of the mortgage. An increase of several percentage points might raise payments by hundreds of dollars per month.



• If a loan has an adjustable rate, ask when and how the rate and loan payment could change.



• Find out how much down payment is required. Some lenders require 20 percent of the home's purchase price as a down payment. But many lenders now offer loans that require less. In these cases, you may be required to purchase private mortgage insurance (PMI) to protect the lender if you fall behind on payments.



• If PMI is required, ask what the total cost of the insurance will be. How much will the monthly mortgage payment be when the PMI premium is added and how long you will be required to carry PMI?



• Ask if you can pay off the loan early and if there is a penalty for doing so.

In addition, there is a long list of sources for mortgages loans: mortgage banks, mortgage brokers, banks, thrifts and credit unions, home builders, real estate agencies and Internet lenders.

Tips for working with lenders:

• Get recommendations: Ask friends and family members for suggestions, especially if they've recently obtained a loan.



• Check credentials: Mortgage bankers are regulated by either your state's department of banking or division of real estate. Check with the appropriate regulator to see if a lender is in good professional standing. Mortgage brokers may be state regulated or not. If not, check with the local chapter of the National Association of Mortgage Brokers or the Better Business Bureau to see if their record is clean.



• Do your homework: Learn about typical mortgages and ask questions when something looks amiss; a broker may be trying to pad closing costs or other fees at your expense.



• Take care online: There are plenty of attractive deals online, but first make sure you're dealing with a reliable broker or lender.

The Real Estate Settlement Procedures Act (RESPA) requires lenders to give you information on all closing costs and escrow account practices. Any business relationships between the lender and closing service providers or other parties to the transaction must also be disclosed. Many of the fees are negotiable. More information is available from the Federal Trade Commission, the Federal Reserve Board, and the Department of Housing and Urban Development.

For more information on home buying and mortgages, visit Fannie Mae's web site at www.fanniemae.com or call 202-752-7000. The Mortgage Bankers Association also offers their website, www.stopmortgagefraud.com.