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How to Get the Best Mortgage Rate

You’ll need to pay back your mortgage for years to come, so scoring a low interest rate is critical. The lower the rate, the less you’ll pay over the life of your loan. Whether you’ve already started shopping for a mortgage or you’ve just started thinking about saving up for a down payment, these tips will show you how to get the best mortgage rate on your home.

When shopping for a mortgage, one of the most important features to consider is the interest rate on the loan. A few percentage points on a loan you’ll be paying back for the next 15 or 30 years can make a difference of thousands of dollars over the life of the loan. If you’re in the market for a mortgage or you plan on buying a home sometime in the future, these tips will help you get the best mortgage rate.

1. Maximize Your Credit Score

The best way to get a low interest rate on a home loan is to improve your credit score. In the months leading up to your mortgage application, concentrate on boosting that magic three-digit number by using your credit cards responsibly. This means paying every credit card bill on time, not opening new credit card accounts, regularly checking your credit report for errors and keeping your credit utilization under 30%. You’ll also want to make serious progress toward paying down excessive credit card debt if it’s hindering your ability to save.

2. Save a Bigger Down Payment

The more money you put down on your new home, the greater your chances are of obtaining a lower mortgage rate. While lenders may accept lower down payments, a down payment equal to 20% of the home’s total value may position you as a responsible borrower and net you a lower rate as a result. Putting 20% down also means you’ll avoid paying PMI (Private Mortgage Insurance), which tacks an additional cost onto your monthly mortgage payments.

3. Borrow Less Than You Qualify For

As temping as it is to borrow as much as possible, be mindful of how that might affect your interest rate and overall cost of the loan. Having a higher debt-to-income ratio can negatively affect your rate and other home costs, especially if mortgage insurance is required.

4. Choose a Shorter-Term Loan

Most people think of mortgages as a 30-year loan, but a 15- or 20-year mortgage can actually be a better choice for many homebuyers. A mortgage with a shorter term nearly always has a lower rate than a 30-year mortgage from the same lender. The monthly payments will be significantly higher when compared to a 30-year mortgage, but the overall interest paid on the loan will be significantly lower. As a bonus, you’ll build equity in the home faster and own your house free and clear in half the time!

If you already own a home, you may want to consider refinancing to a 15-year mortgage. You’ll pay off your loan sooner and, with a lower interest rate, you may not see much of a difference in your monthly payments.

5. See What Additional Fees or Incentives Your Lender Can Offer

Before closing on a mortgage, it’s important to understand all the fees and related costs you’ll need to pay beyond the down payment; for example, closing costs and title fees. Be sure you can afford these additional costs before signing on the dotted line.

It’s also a good idea to ask about any incentives your lender offers that can help bring down your mortgage rate. Most lenders give borrowers the opportunity to purchase discount points, which allow the borrower to lower their mortgage rate by a fraction of a percent for each point purchased. Points are priced at 1% of the loan amount, or $1,000 for every $100,000 you borrow.


Inquire about other incentives your lender may offer as well, such as first-time homebuyer programs or assistance with fees. For example, Desert Financial offers $500 toward closing costs1 if you use a Participating Real Estate Broker.

When you’re shopping for a new home, it’s easy to get wrapped up in choosing the perfect pad. But you also want to make sure that you choose the right mortgage for your needs. Obtaining approval for a mortgage with a low interest rate means saving on interest payments for years to come. If you follow the steps outlined above, you’ll be much closer to scoring a mortgage with the best possible rate!

Get a home loan with Desert Financial. It’s easier than you think!


1Participation in the Real Estate Broker Program is voluntary. Desert Financial Credit Union and its subsidiary Define Mortgage Solutions LLC do not receive any benefit, monetary or otherwise, from the Participating Broker under this program. Participating Brokers are non-affiliated third parties of Define Mortgage Solutions LLC and Define Mortgage Solutions LLC makes no warranties or representations about the services provided by Participating Brokers. To participate in this program, the member does not have to finance mortgage loan through Define Mortgage Solutions LLC. For full program details, see the Real Estate Broker Program Member Notice Acknowledgement.

Mortgage loans are offered by Define Mortgage Solutions, LLC, NMLS ID #1761612, a subsidiary of Desert Financial Credit Union. BK#0949053

The material presented here is for educational purposes only and is not intended to be used as financial, investment, or legal advice.