There is already some great advice here for you. I will also agree that you should go with an independent broker over a correspondent or bank. The reason being is that you will have more flexibility, and often times the Broker will have some lattitude that believe it or not, the bank itself doesn't have. Being able to pull a deal from one source and send it to another if rates drop is a nice option. One more thing about brokers, we have to show you how much we made from the bank on the loan. The bank doesn't disclose that, and many times when you are getting a "no points, or no fee" deal, the bank or correspondent just backdoored you for a nice sum of change.
Credit Unions can be a good source for a loan from time to time, but because they are portfolio lenders and the RE market has slowed, they might be cutting back on their RE loans and focusing on building their portfolio in other areas. Additionally, while credit unions are easy to work with, they do not have the most flexible underwriting in the industry. If you have any special circumstances or issues, definitely go the broker route. If you do look into credit unions Wescom is a good suggestion. I'm a member there and get excellent service.
Now for some advice on programs: If you are comming in with 10% down, you will probably see some come ons from people trying to set you up with "option arms", "defered interest programs", "flex pay loans" etc. Run like hell as these folks are just trying to get you into a high bps spread deal that pays them on the back end and leaves you in a screwed up equity position down the road. Even if you were going to pay the I/O option on one of these loans, the margins on them at max rebate to the broker/correspondent, will result in a much higher fully indexed rate than a traditional I/O product.
Find someone who will lay their cards out on the table so you know you're not getting sold the program that makes the most rebate for the L.O., but rather the program that makes the most sense for you. Think realistically about how long you plan to be in the house and bear than in mind when making decisions.
If you need any assistance, feel free to shoot me a PM here or give me a call at 310-594-1023. I've worked both the correspondent (bank) and broker side of the business and know the motivators for Loan Officers in both situations.
One last thought, you are starting your buying process just as prices are starting to stagnate in many markets. If you aren't in a big hurry to move, I'd be willing to speculate that there won't be another prime rate increase at the next fed meeting and that might hold interest rates where they are, while the real estate industry continues to slow. In other words, you might be able to get a better deal on a property in 30-60 days from now at comparable rates. No one can promise that will be the case, but for the first time in a long time, it looks like that may be the case.
Good luck,
Chris
