Borrowers who pick their mortgage lenders strictly by who has the lowest interest rates are missing the boat. They may be destined to pay more money for their loans, or worse.

Here's a no nonsense approach to choosing the right lender, who will be there when you need him, at closing and beyond.Look for lenders who are

- Licensed to operate in the state in which you are purchasing property,

- Are members of the state and/or American Mortgage Bankers Association, or

- Who are federally charted (such as a bank, S&L or credit union), or who are FHA and/or VA approved.

States that license mortgage activity only have jurisdiction with respect to property inside their boundaries. Customers may only file complaints with the proper regulatory authorities in the state where the property is located and not where the financial institution is headquartered.

Is the lender seasoned? Lenders who have been in business for five years or longer have been around to weather some pretty tough financial storms in the mortgage industry. You want to be with a lender that is financially strong enough to be a survivor.

Look for lenders who have not had trouble with the Better Business Bureau and the state regulatory authorities.

There is safety and more services available when you are dealing with lenders who are strong.

Get the most for your money. Borrowers should think of themselves as being important customers. If you walked into Bloomingdales and bought $100,000 in merchandise you would be a very important person, even if you said charge it. Expect no less from your mortgage lender.

Who keeps the servicing? Most lenders will sell their mortgages in the secondary market to raise cash so that they can make more loans. However, it may matter where the representative is who handles your monthly mortgage checks.

Compare all of the costs attached to the loan. Lower interest rates may hide huge processing and service fees that do not get advertised or even calculated into the APR, or annual percentage rate.

Hidden costs, called junk fees in the trade, can add thousands to a borrower's costs and dramatically alter what is left for a down payment, or at least what is left over after the closing.

Fees vary from lender to lender. Shop and compare:

1) Loan application fees are typically $300 and usually include credit and appraisal fees.

2) Mortgage points, typically run from 0 points to three points. (A point is one percent of the loan amount.) However, points may be a bit higher if the interest rate is noticeably lower than the market rate.

3) Loan origination fees. "These may run to a full point and should be included in with the mortgage points advertised to the potential borrower," said Winslow. "However, always ask the lender if the origination fee is included in the quotation given. Take nothing for granted."

Be wary of document preparation fees, internal shipping and reproduction charges, any processing fees that are added on at closing.