- 1). Improve your credit history before applying for a home loan. Lenders take your history into account when determining the interest rate on a mortgage loan. Therefore, do everything possible to raise your score before submitting an application. Pay off credit card debt and other loans. Pay your bills on time. Check your credit report to make sure the dates are correct.
- 2). Learn about mortgage points. Buyers usually aim to keep their closing costs (fees paid to the broker or lender) to a minimum. However, if you have the extra income, discuss paying mortgage points to your lender in exchange for a better mortgage rate. Each point paid costs one percent of the loan balance, and each point reduces the interest rate by .25 percent.
- 3). Shop around for the best rate. Talk with more than one lender when looking for a mortgage loan. Ask for a no-obligation loan quote, wherein lenders review your income and credit to determine an interest rate. Compare loan quotes and choose the mortgage company with the best deal.
- 4). Lock in the rate with your mortgage company. Mortgage interest rates fluctuate, and yours can increase before you are able to locate a property and close on the loan. Talk to your lender about a lock-in agreement to protect you from interest rate increases. Lenders may charge a fee for this service, and lock-ins do expire after an agreed-upon period.