YOUR MORTGAGE : Banks Give S&Ls; a Run for Their Loan Money : Financing: Consumers are advised to check with at least three banks, three S&Ls; and three mortgage brokers as competition heightens among financial institutions.

Whether you’re seeking a loan to buy a new home or simply planning to refinance your current mortgage, you’ll be faced with an important question: “Will I get the best deal from a bank or savings and loan association?”

Of the nearly 10,000 people who attended the three home buyers fairs sponsored recently by The Times, the question of which type of financial institution is most likely to offer the best deal on a mortgage was one of the most frequently asked.

And, as is always the case when you’re borrowing money, there’s just no cut-and-dried answer.

Over the years, savings and loan associations generally offered the best deals because they specialized in making home loans. Banks tended to concentrate their lending efforts on big commercial accounts, car loans, credit cards and the like.

But many of those same banks have since refocused their marketing efforts on making more home loans and--in some cases--now offer better terms than their thrift counterparts.

“Some banks have launched such aggressive marketing campaigns that even I have to admit that S&Ls; are no longer the only game in town for home buyers,” said Sam Lyons, a senior vice president of savings and loan giant Great Western.

The increased competition between banks and S&Ls; for a bigger share of the mortgage market has generally benefited consumers. Many financial institutions are now slashing the up-front costs to attract new customers, while others are developing new types of loans to address the changing needs of today’s borrowers.

Since the line between banks and S&Ls; has become blurred, it’s best to check with at least three of each if you’re hunting for a mortgage today.

Also check with at least three mortgage brokers. Brokers represent several lending institutions instead of just one, much like independent insurance agents represent several insurers.

“Talking with a mortgage broker supplements your own research because he can tell you about the programs several lenders are offering,” said Peter G. Miller, author of “The Common Sense Mortgage” and other real estate books.

“Once you’ve talked to several lenders and combine the information that the mortgage broker gave you, you’ll have a pretty good idea of who’s got the best deal.”

One key question that you’ll have to ask each potential lender is how much out-of-pocket expenses you’ll incur before the loan is made. Your biggest up-front cost will likely be for “points.”

One point is equal to 1% of the total loan amount. So if you want a $100,000 loan and the lender demands two points, you would pay $2,000 in points to get the loan.

Also ask about any other expenses that you will have to pay for in cash.

For example, some lenders charge nothing for their appraisals while others charge $250 or more. Fees for processing your loan application, preparing loan documents and other items can also vary widely from one lender to the next.

Also make sure you know exactly which rate the lender is quoting for you. Some quote the “nominal” or “note” rate, which reflects the rate on the loan before compounding.

A better indicator of a loan’s true cost is the annual percentage rate (APR). It typically takes into consideration the effects of compounding, the amount of points you’ll be charged and a variety of other costs you’ll incur.

Still, you shouldn’t automatically assume that the lender or mortgage broker who quotes you the lowest APR is offering the loan that’s best for you.

“Looking at the APR gives you the clearest picture of what the loan will really cost, but a lot also depends on how long you plan on living in the home,” said John Tuccillo, chief economist of the National Assn. of Realtors.

As an example, let’s say that you’ve narrowed your choices down to two lenders. The first lender is offering a 10 1/2% loan but will charge you two points for your 30-year, $100,000 fixed-rate mortgage. The second will charge you an 11% rate but will demand no points.

If you chose the first lender, monthly principal and interest payments on the loan would be $915, and your points would cost you $2,000. If you went with the second lender, your monthly payments would be $952 but you would pay nothing in points.

You would save $37 a month by choosing the 10 1/2% loan. However, you would have to stay in the property at least 55 months before your savings will offset the $2,000 in up-front fees you would pay (55 x $37 equals $2,035).

If you plan on leaving before 55 months are up, you would probably be better off choosing the second loan. Even though your monthly payments will be a bit higher, you’ll save money in the long-run because you won’t have to come up with $2,000 in up-front cash.

You can do your mortgage-shopping by phone, but it’s usually better to visit each lender or mortgage broker in person. It gives you a better idea of their professionalism and fosters a dialogue that could make the difference between getting the loan and getting turned down.

Consider the case of Carla Simpson, who recently bought her first home in the San Fernando Valley.

Simpson said she first contacted several lenders by phone to see about getting a mortgage loan, but they all rejected her because her annual earnings weren’t high enough to qualify for the size of the loan that was needed.

She finally scheduled an appointment to visit a local lender in person. As Simpson and the loan officer talked, she mentioned that she was recently divorced.

“He told me that I could count the $400 a month in alimony that I get as income,” Simpson said. “The subject never came up with the brokers I talked to on the phone.

“That ‘extra’ $400 a month was enough for me to qualify for a loan,” Simpson said. “If I hadn’t visited the lender in person, I probably would’ve given up house-hunting by now.”

Letters and questions may be sent to Myers at the Real Estate section, Los Angeles Times, Times Mirror Square, Los Angeles 90053. Questions cannot be answered individually.