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You’ll probably spend weeks or even months selecting the home of your dreams. Choosing a lender to finance it will take less time but should be handled just as carefully. There is a difference between mortgage brokers and lending institutions, explains Stacey D. Stewart, president and CEO of the Fannie Mae Foundation. “A broker acts as a bridge between the consumer and a mortgage lender and may offer products for a variety of lenders. A mortgage lender is a financial institution that provides credit directly to the consumer.” A broker often charges an up-front fee for services. So if you use one, ask about the fee structure.

If you’re buying a home or refinancing, keep these tips in mind as you shop for a mortgage lender:

* Learn about the various types of mortgages available–such as 30-year or 15-year fixed rate, adjustable rate mortgage (ARM), balloon–so that as you discuss options, you’ll be more likely to accept the best deal.

* Get interest-rate quotes from at least three lending institutions or brokers before settling on one. Get referrals from your realtor, friends and family members who have recently purchased homes, or check the Yellow Pages, newspapers or Internet search engines.

* Request an itemization of closing costs from each lender before submitting an application. Inquire about charges on one lender’s list that are not on others; this may prevent undisclosed fees from surprising you at settlement.

* Select a lender who is willing to answer your questions and help you navigate the mortgage terrain. Expect the officer to ask questions. Your replies can give her important cues about the best mortgage program to suggest.

* Protect yourself from predatory lending practices, which include steering customers toward higher interest rates, assessing unnecessary fees or adding points without reducing the interest rate. If you suspect you’re a target, Stewart suggests asking an official at a nonprofit housing agency or legal-aid organization to review the proposed offer free of charge and advise you if it’s sound.

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COPYRIGHT 2004 Gale Group