You can walk into the bank where you have your checking account and take whatever mortgage terms they have to offer, but that wouldn't be the smartest way to go. It will pay you — perhaps thousands of dollars over the life of the loan — to shop around for mortgage terms. They are not the same with every institution. You could start with the bank where you keep your savings and checking accounts, since lenders often give preferential treatment to their long-time customers. But before you accept the first terms offered to you, check out what other institutions are offering.

A variety of sources lend mortgage money. These include savings banks and savings and loan associations, commercial banks, credit unions, mortgage bankers, mortgage brokers, government agencies, and sellers themselves.

Mortgage bankers qualify applicants, find the best available loans, fund the initial loan, and then sell or place that loan with another lender or investor. Mortgage brokers are persons (or companies) who, for a fee, will do the work to find house hunters a lender somewhere around the country.

Government agencies that lend mortgage money include the Federal Housing Administration (FHA), the Department of Veterans' Affairs (VA), the Farmers Home Administration (FmHA), and your state's mortgage finance agency.

In seller financing, home sellers offer mortgages to buyers, usually for a limited time of three to five years. After that time is up, the buyer secures more traditional, long-term financing. Seller financing works for buyers in a very slow sellers' market, times in which properties remain unsold and on the market for months, perhaps years, or when a seller is particularly eager to move right away and cannot wait the few months it takes to sell the house through ordinary selling channels. This can be an excellent deal for the seller who does not need the proceeds from the house immediately and recognizes that quite a nice return can be realized by offering a loan to the buyer at 8 or 9 percent interest.