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Where to start

If you suspect that lenders might try to take advantage of you because of your race or the neighborhood you live in, this advice from bankrate.com might come in handy.

Try a non-profit.

Some of the best mortgage deals can be found through non-profit agencies that have lending agreements with banks.

The federal Community Reinvestment Act requires banks to lend in areas where they take deposits. Although enforcement often is more rumor than fact, banks sign deals with community groups, which then send loan applicants to those banks.

Hundreds of non-profit agencies do this kind of work. The Department of Housing and Urban Development compiles a list of approved agencies called the housing counseling clearinghouse. You can find the nearest agency by calling (888) 466-3487.

Go to the counselor's office.

A housing finance counselor will teach you how to improve your credit, draw up a budget and figure out how much house you can afford. Some can act as a broker and send you to the right mortgage lender.

Shop around.

The best loans go to people who compare at least four or five offers, so it pays to approach several lenders.

A good place to start is one of the HUD-approved agencies, where a counselor might be able to point you to the lender who can offer the best deal.

Whether or not you go to a counseling agency, talk to loan officers from traditional banks and mortgage brokers.

You're asking for trouble if you go first to a subprime lender, said Matthew Lee, executive director of Inner City Press/Community on the Move, a consumer advocacy organization in New York. Those lenders specialize in giving loans with high rates and fees, usually to people with flawed credit.

The problem is that a subprime lender will extend you a loan with high rates and fees even if you're eligible for a sweeter deal from a regular bank.

Unfortunately, some loan shoppers go first to subprime lenders because there are no bank branches in their neighborhood.

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