-Look at your credit report. Good credit is the best indicator for a lender to lend you money with low interest rates. If you take a look at your credit report and notice there is wrong information on it, you should clear it up with the three consumer credit agencies (Equifax, Experian, Trans Union). If you have bad credit, the first thing you should do is fix it. You do this by paying off your debt to improve your credit score, or begin building your credit history. You can also write to your lender and explain to them your situation. Some things are out of your control such as a costly medical emergency, or being laid off from work. Lenders will take those into consideration when reviewing your application.

-Minimize your debt. Lenders not only take into account how much you debt you currently have when you apply for a mortgage (e.g. your car loan, student loan, credit card and other outstanding debts), but they will also consider the amount of debt you’re about to take on from them. The less debt you owe the less risk you pose to the lenders, the lower your interest will become. So if you can make a big down payment on your house, you will borrow less money from your lender and that will guarantee a low interest rate for you. This also works with the line of credit that you have been pre- approved for. If you can lower your line of credit you show your lender that you are also willing to take on less debt which can reflect positively in your interest rate as well.

-Use a mortgage calculator. These nifty tools are available every where online. They not only help you anticipate your monthly payment, but you can learn to understand the actual amount of interest you will have to pay over the course of your mortgage. With that you can gauge whether or not you can afford to pay back the amount you borrow.

-Get an Adjustable Rate Mortgage (ARM). Adjustable Rate Mortgage usually has lower initial interest rates than a 30-year fixed mortgages. Often times the rates will range from 1.5 to 2 percentage points lower than a 30-year fixed mortgage. You can choose the initial period for this low fixed interest rate, which can range any where from six months to ten years. After this initial period the interest rate will adjust according to the market. For comparison, a 30 year fixed mortgage loan with a 5.25% interest rate would have a monthly payment of $828. A 5/1 ARM monthly payment would be $729 for the first five years with a 4.15% interest rate. This monthly saving of one hundred dollars could be used to finance a larger down payment, which in turn will help lower your interest rates even more.

To find out how to improve your credit rating and get out of debt, please go to Credit Score Range to find out more about your fico score range and what you can do to raise it so you get the lowest rates.