When applying for a mortgage, everyone wants to do what they can to get the best rate possible. A single additional percentage point in interest could lead to spending thousands of dollars more over the course of the loan. Here are some tips that will help you get the best rate possible on your mortgage.

Pay for Points

It's possible that your mortgage lender will give you an offer to purchase points towards your mortgage. What this means is that you are essentially paying for a lower mortgage rate. By paying some additional cash up front, you will save money over the entire life of the loan.

Of course, it is not always wise to purchase points. The general consensus is that it is better to buy points if you plan on staying in the home for a long time and to avoid purchasing them if you know you will sell soon. Your mortgage lender can help you run the numbers to determine if it is a good decision to purchase points and lower your interest rate.

Know When To Get An Adjustable Rate Loan

Similar to points, there are times where it is wise to get an adjustable rate loan for your mortgage. These types of loans give you a very low rate for a small time period, then increase the rate after that time period expires. As you may be able to guess by the general overview of an adjustable rate loan, these are great for homeowners who know that they will be selling their home in a few years. Avoid these loans if you are buying a home you plan to settle down into for a long time.

Improve Your Credit

A big factor that plays into your interest rate is your credit since it shows how risk you are as a lender. You'll want to pull your credit reports from each agency and review what is on them. Correct errors that exist and try to pay off credit cards and other lines of credit that you have.

Provide A Big Down Payment

Being able to provide a large down payment will also play into what rate you get. In general, you'll stop seeing benefits once you've saved up 20% for a home. At the very least, that guarantees that you do not need to pay private mortgage insurance, which is an additional cost you pay each month for either the life of the loan or until you've paid back 20% of its value.

For more information, contact your local mortgage brokers.