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Steamboat Springs — Annette Krey was in tears.

She was about to close on a home she was buying in Milner. She had called friends to help her move her belongings, and she had already told her former landlord she would be moving out.

Krey, who was using a mortgage broker from her former hometown of Strasburg, saw her closing delayed for two weeks. Although her mortgage broker was familiar with her financial background, he was unfamiliar with Milner and had trouble finding a comparable property -- the home she wanted had an unusual four-car garage -- to use for appraisal.

The closing was delayed while her mortgage broker tried to familiarize himself with the area. Between continuing to pay rent she hadn't counted on and worrying the sellers were going to cancel the contract, Krey said the delay caused her a lot of stress.

She isn't the only hopeful homebuyer who has suffered heartache trying to use a lender who is unfamiliar with the market.

Prudential Steamboat Realtors Chris Sachs and Annette Hall said they have run into similar situations before. Sachs and Hall advise using a local lender whenever possible to avoid such headaches.

Century 21 Realtor David Lacey said the biggest advantage to getting a local mortgage loan, is that local lender understand the market better.

For example, a condominium in a complex usually used for rentals might be viewed as investment property rather than a home, and out-of-town or Web-based lenders simply can't visualize the type of property a homeowner wants to buy.

Also, Routt County lenders understand local laws, giving homebuyers the advantage, Sachs said. Different states have different legal requirements pertaining to how loans are funded and the amount of time to close on a house.

"A lender trying to give loans in 10 different states is like me trying to sell real estate in 10 different states," Sachs said. "It won't work well."

Still, Web-based companies, such as LendingTree, Ditech.com and Ameriquest, contend they have advantages, particularly with cost and convenience over local loans. LendingTree contends that its ability to reach a wide variety of lending organizations ensures consumers get the best deal possible.

LendingTree.com states it will "provide you with the easiest, most convenient way to get a loan you've ever experienced, provide you with great rates and terms and put you in complete control of your borrowing process."

But local Realtors warn such companies don't realize or understand local appraisal deadlines, meaning the seller can cancel the deal and the buyer can lose earnest money.

Sometimes outside lenders do not understand different states' deadlines and requirements, Prudential Steamboat Realtor Chris Wittemyer said.

"The thought that you can get a better rate out of town, I've never seen to be true," Wittemyer said.

A major reason to stick with a local lender, especially in a small community such as Steamboat Springs, is that "locals get most all of their business from referrals," Scott Bessette of Homebuyers Mortgage in Steamboat Springs said.

"Locals will try harder if they think they will get future business from you," Sachs said. "All small businesses in this town live on referrals, and there's so much incentive from referrals that you can't hide if you make a mistake. Out-of-town lenders don't care so much that they make a mistake."

Sachs said not all out of town loans are bad loans, but local loans minimize the chances of encountering problems and overall are a more promising way to ensure buyer, sellers, Realtors and lenders will be satisfied.