
How to Get the Best Mortgage Rates
For homeowners, a common financial goal is to pay off the mortgage as soon as possible and avoid paying extra interest. The lower the interest rates, the less you will owe down the line. That’s why it’s important to find a loan with the lowest possible interest rates, usually represented as annual percentage rate (APR), and other fees associated with the lending process. Use this guide to help you find the best mortgage rates to save money over time.
LESSON CONTENTS
Understanding the Application Process
Whether you’re looking to buy your first home or refinance your home, there’s a lot you can do to improve your mortgage rates. To get the best mortgage rates, you have to understand the lending process. The first step is to fill out a mortgage application. Financial institutions will look at your credit report when evaluating your application. There are three main factors for them to consider: your debt-to-income ratio, credit score and assets. They will use this information to determine the potential risk of lending you money.
The stronger your application, the better the mortgage rates. Lenders often charge higher interest rates to borrowers with lower credit scores as a way of reducing their risk of default. That’s why it is important to have a good credit score—it puts you in a position to get a better rate.
How to Get the Best Mortgage Rates:
Now that you understand how the factors that help determine mortgage rates, it’s time to start improving your application. Let’s take a look at all the factors:
Improve Your Credit Score
Your credit score represents your ability to pay back your loans on time. It includes financial information, including your credit card, income and debt history as well as regular payments such as rent, utilities and insurance. Scores range anywhere from 300 to 850. They are issued by one of the three major credit reporting agencies, including Equifax, Experian and TransUnion.
If you’re late on monthly payments or fail to repay your debts on time, expect your credit score to take a hit. Start making regular, on time or early payments to improve your credit score. Set up automatic payments, so you don’t have to worry about forgetting to make a payment. Request a free copy of your credit score to get a better idea of your standing as a borrower. Review your credit report to make sure it’s accurate and contact the reporting agency to correct any errors.
Improve Your Debt-to-Income Ratio
This figure represents your ability to handle your monthly payments and repay your loans. Lenders will subtract your outstanding debt payments from your existing income and/or savings to see how much you can afford to pay every month. Do your best to increase your income and/or pay off your debts to lock in better mortgage rates.
Lenders will also look at your employment history to make sure you have income security. Banks and credit unions often ask for pay stubs from the last 30 days as well as W-2s from the last two years.
You may be able to get approved with a job offer if you’re just starting your career or if you have remained in an industry but changed employers as long as the offer stipulates what you’ll be paid. Self-employed individuals often have a harder time getting approved than those with a salaried position. If you work freelance or per diem, the lender may ask for business records to verify your income.
Take Advantage of Special Programs and Discounts
Many states offer various programs to first-time homebuyers, including down payment assistance, low interest rates and reduced closing costs. Do some research or check with a local lender to see what mortgage programs are available in your area.
Pay for Discount Points
Some lenders offer discount points to borrowers. The idea is that you pay a fee upfront to reduce your interest rates down the line. For example, you may be able to pay a fee equal to 1% of the home’s value to shave down your interest rates by 0.25%. This can be effective for some borrowers, but the cost of the upfront fee may outweigh any potential savings on interest. Be sure to calculate the potential savings before signing up for these programs to make sure they will benefit you in the end.
Increase the Down Payment
One of the best ways to lock in lower interest rates is to increase the size of the down payment. Lenders and states often have different down payment requirements. In some areas, you may be asked to pay as much as 20% of the home’s value upfront, while other lenders will let you get by with just a 3.5%. FHA mortgage loans require just 3.5% down payment, while VA loans will let you buy a house with a zero down payment. If you put less than 20% down, you will need to pay mortgage insurance each month until your equity reaches 20% (not required for VA loans). Increasing your down payment to 20% or more will eliminate this expense.
Try to increase how much you can pay upfront to lower your interest rate. This reduces how much debt you have to take on in the first place. The lender won’t have to take on as much risk, and they will usually pass those savings on to you. You might have to wait a year or two until you have saved more money. You can also shop for a less expensive home to increase your down payment.
Find a Lender with the Best Mortgage Loan Rates
Different types of lenders tend to offer different types of mortgage rates. For example, credit union mortgage rates tend to be lower than those you’d find at a bank. Research different lenders to find the best possible mortgage rates. Analyze the loan estimate to make sure you understand the full cost of the loan, including closing costs and borrowing fees. You will also have to choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM). Adjustable rates mortgages usually offer a lower rate upfront, but it will go up after the first few years. This may be a good option if you plan on paying off your home within the first few years. Otherwise, you may be better off with a fixed rate.
Contact the mortgage loan officers at Ent to learn more about how to lock in the best mortgage rates. A few changes can help you save thousands of dollars down the line.
Stress less with Colorado mortgage experts.
Apply for a mortgage or talk with a Mortgage Loan Officer.
Related Resources
View AllSeven Credit Score Pitfalls to Avoid
When lenders size you up for a mortgage, credit card, or small-business line, they aren’t reading your diary—they’re scanning your credit score. According to Experian, the average U.S. FICO Score was 715 for 2024 (Horymski, 2025), placing much of the country in the “good” range. However, that average hides lower scores for millions of consumers who stumble into common credit score pitfalls.
Ways to Build Credit
To help you get the most out of your credit card, we wanted to share some ways to establish and improve your credit. Building a solid credit history is essential for financial health, as it influences loan approvals, interest rates and even employment opportunities. By monitoring your credit regularly and maintaining good credit habits, you can build and maintain a strong credit history, opening doors to better financial opportunities in the future.
Credit Card vs Debit Card: What's the difference
Nowadays, debit and credit cards are used as the primary way to pay for purchases. They are designed to be easy and convenient to use on the go, so you don’t have to carry around large quantities of cash. You can also freeze the card if it is lost or stolen to limit your exposure to fraud. But credit and debit cards work in different ways. A debit card gives you a direct line to the money already in your checking account, while a credit card means buying something on credit. You will then need to pay off the balance on the card plus any interest that has accrued. Credit cards can enhance your credit score, while debit cards do not impact credit history. Additionally, credit cards frequently offer rewards and benefits, such as cash back or points. Learn how to find the right type of card for your situation and ensure you use these two cards responsibly.
What Can You Do with an Excellent Credit Score?
If you’ve ever wondered what you can do with good credit, the answer is quite a lot. One, a high credit score opens doors to better interest rates. Two, it grants access to premium credit cards, exclusive loyalty programs, and other perks. In essence, a good or excellent credit score is a financial launchpad. You can leverage it to turn your financial aspirations into realities—whether you want to buy a home, finance a new car at a low interest rate, or qualify for attractive travel rewards cards that make your next vacation more affordable.
So, what can you do with an excellent credit score specifically? You could negotiate more favorable terms on major loans, tap into 0% introductory APR credit union credit card offers, and qualify for high-end financial products. It could mean fewer hassles when applying for rentals or landing that dream apartment. A top tier score also helps you keep more money in your pocket over the long run. With lower interest charges and fewer fees, you can channel your savings into investments and retirement accounts or simply enjoy more of your hard-earned money.
How to Use a Credit Card Responsibly
Credit cards offer convenience, security, and even rewards. However, using a credit card without proper planning can lead to high-interest debt and land you in financial hardship. Therefore, it’s important to understand how to use a credit card responsibly. Setting a clear budget, paying off balances in full, monitoring credit scores, and avoiding common pitfalls are essential credit card management techniques. With discipline, you can enjoy the benefits of credit while maintaining control over your finances.
What is a HELOC and What Can You Use it For?
Imagine unlocking a treasure chest hidden within your home—this is essentially what a Home Equity Line of Credit (HELOC) allows you to do. So, what is a HELOC? A HELOC loan lets you tap into the built-up equity of your home, offering a flexible line of credit that you can use for a myriad of purposes. You can use it for a kitchen makeover, consolidating high-interest debt, funding your child's education or as a financial safety net to cover unforeseen costs. Simply put, it transforms your home’s equity into accessible cash whenever needed.
What is a Good Credit Score?
In personal finance, one of the most pivotal metrics that reflects your financial health is your credit score. This three-digit number is the culmination of your credit actions and behaviors. It is a shorthand for lenders to gauge your trustworthiness as a borrower. Are you wondering how to build credit? First, understand the nuances of credit scores, including what a good credit score is and how it can affect your financial opportunities. This guide explains the key variables and details to navigate the credit market successfully.
The Good and Bad of Store Credit Cards
If you’ve ever been to a department store or chain retailer, the salesperson probably asked you if you wanted to open a store credit card. A store credit card is like a normal credit card except that, in most cases, you can only use it at participating stores and businesses. Some of the biggest chain outlets and retailers, such as Target, Home Depot, Walmart, Macy’s and other clothing retailers offer this option.
But how do these cards work? And can they actually help you save money? Let’s find out.
Is Your HELOC Draw Period Coming to an End? Here’s What to Know
If you have a home equity line of credit (HELOC), you can withdraw money from your open HELOC line during what’s known as the draw period. HELOCs work like credit cards by providing you with a revolving line of credit, letting you borrow what you need, when you need it. Once you get approved for a HELOC loan, you can use this money to pay for home repairs and other major life expenses as needed.
However, once the draw period comes to an end, you can no longer access these funds. You will also need to start repaying the money borrowed plus interest. It's important to know how much of your HELOC has been utilized, so you don't run out of money in the middle of your project or life event. Learn more about the HELOC draw period and what this means for your finances.
Tips for Managing Student Loan Payments
Beginning your career after college is meant to bring optimism as you start a new phase in your life. Unfortunately, many Americans are weighed down by student debts. With different repayment options, interest rates, and loan terms, it's easy to feel overwhelmed. However, with some strategies, you can manage your student loan debt and avoid default.
Since debt management is critical for long-term financial health, we'll provide student loan management tips to help you stay on track and achieve financial stability.
What is Credit History?
Anyone that has taken on debt has what is known as a credit history. Credit bureaus keep records of your credit history to determine whether you can pay off your debt on time. Lenders will then use this information when deciding whether to issue you a loan.
Your credit history will impact your chances of getting approved for a loan as well as your credit limit. If you have a bad credit rating, you may also have to pay a higher interest rate, increasing debt. If you are buying a home for the first time or making a major purchase, how credit ratings work should be important to you. If you are thinking of applying for a loan, use this guide to improve your credit history and save money.
How to Manage Credit Card Debt During Periods of High Inflation
With rising inflation rates in the United States, Americans increasingly rely on credit cards to cover their expenses. However, one of the growing effects of inflation is a significant increase in credit card balances, which creates the risk of consumer financial stress due to both inflation and mounting debt. Here are several tips for managing your credit cards during this inflationary period.