How can i get the lowest mortgage rate

Here are the steps you should take to find the lowest-priced loan available. If you can afford higher payments and want to dispense with the debt sooner, consider a year fixed. It features a lower interest rate and could save you thousands over the life of the loan.

Another option is to choose a shorter-term adjustable rate mortgage ARM. These mortgages feature lower rates for an introductory period, then a higher rate. After that period, it can adjust annually based on market rates but can only increase a maximum of 5 percentage points above the original rate.

If you're planning to be in your home for years to come, this may not be the best option, especially since fixed rates are attractive now. Shop for a mortgage at a variety of lenders, including banks, mortgage brokers, online originators like Quicken Loans, and aggregators like Lending Tree.

Go to their websites and fill out preliminary forms to get interest rate estimates immediately or calls from company representatives who can quickly get quotes for you. You can also go to Bankrate. Another option is to find a phone number on the lender's website and call directly. We found that you can get pretty accurate estimates over the phone. If you want a quote that could lead to a firm offer, you'll need to give the lender your Social Security number.

Are you just starting to shop for a home, or do you have an accepted offer or a signed contract? Once you start filling out loan applications, you'll be expected to verify many aspects of your financial and personal life.

Ensure that this part of the process proceeds seamlessly by having all of your essential paperwork in hand. In addition to considering a mortgage from the big banks and online lenders, research smaller, lower-profile players such as credit unions and community banks. Keith Gumbinger, vice president of HSH. A mortgage broker can shop among many lenders and get better rates than you might on your own.

But be aware that brokers get paid by the banks, not you, so check them out carefully. Mortgage brokers can save you money. For example, say one lender offers a lower interest rate than others but has higher closing costs , which are the fees you'll pay to finalize your loan. You may want to go with a lender with lower closing costs.

In that case, you take your better interest rate offer back to a lender with more competitive closing costs and ask that lender to come down on its rate. If that lender wants your business, it may work with you.

With an adjustable-rate mortgage , or ARM, you lock in your interest rate for a preset period of time, after which it can climb.

Clearly, there are risks in going that route -- one being that you'll end up seeing your rate rise. But the upside of getting an ARM is that you'll usually manage to snag a lower interest rate initially. And if you're buying a starter home or a home you don't plan to stay in for many years, then an adjustable-rate mortgage could make a lot of sense and result in interest-rate savings. There is a lot to be gained by scoring a low interest rate on your home loan. Follow these tricks to make your mortgage as affordable as possible.

Boost your credit score The higher your credit score, the more likely mortgage lenders will be to offer you a low interest rate on a home loan. Until you have enough equity to cancel it, PMI will affect you the same way a higher interest rate would: by increasing your monthly payment and your total borrowing costs. Saving up for a bigger down payment can help you avoid PMI altogether. On top of that, a larger down payment can actually get you a lower interest rate.

Having trouble saving up? This strategy still works. You can bring cash to closing to increase your equity. When you take out a year fixed-rate mortgage instead of a year fixed-rate mortgage, the interest rate will normally be lower. In mid-September , for example, the year rate was 2. You also could consider an adjustable-rate mortgage.

Its introductory rate may be lower than what you could get on a fixed-rate mortgage. It might be cheaper in the short term, but it could be more expensive in the long term. We hear you. Decreasing your debt instead of—or in addition to—increasing your income also can improve your DTI ratio. And while earning extra income to throw at your debt is one way to pay it down, cutting your expenses might be another way to do it. Carrying less debt also can improve your credit score. Income, however, is not a factor in credit scoring.

Thousands of mortgage lenders are competing for your business. So another way to make sure you get the best mortgage rate is to apply with at least three lenders and see which offers you the lowest rate.

Each lender is required to give you a loan estimate. Comparing loan estimates to get the best deal is not as straightforward as looking at the interest rate and APR , however. Mortgage rates fluctuate constantly. If you can lock your rate when rates are trending down, even better. For example, someone shopping for a year fixed-rate mortgage in September would want to be aware that over the last year, average rates have ranged from a high of 3.

The strongest borrowers should expect to lock their rate close to 2. A discount point is basically a fee you can pay at closing to reduce your mortgage interest rate. Paying points can be worth it if you keep your mortgage long enough.

If you refinance or sell within a few years, paying points may not be worthwhile. How much can you lower your mortgage rate by paying points?

It depends on market conditions, but a rate reduction of 0. Try to keep everything the same as it was when you got approved for your loan. Any big changes to your borrower profile could make you look riskier and force the lender to charge you a higher interest rate or even decide not to give you a mortgage at all.