How to get the best interest rates

You’ve decided to buy a home and, in doing your due diligence, are researching how to get the best interest rate on a mortgage.

It seems fairly straightforward: A good debt-to-income ratio and good credit score should result in the lowest rates, right?

Maybe, maybe not. Although these are two significant items, other factors also come into play. Some of these include:

* Type of loan. Research whether you qualify for special programs, including those geared toward first-time homebuyers and those aimed at helping people in certain professions to buy homes (think teachers, first responders, and veterans).

* Down payment. The amount of your down payment is likely to affect your interest rate, but it takes some calculating to decide what’s best for you. Will you be better off using a chunk of money to lower your rate, or could you put those funds to better use elsewhere, like in investments?

* Type of lender. Experts recommend shopping around among banks, credit unions, and online lenders to find the best product for you. A 2019 NerdWallet analysis found that a borrower who compares five lenders could save more than $400 in interest in the loan’s first 12 months.

* Property location. Certain loan types, like USDA mortgages, offer lower interest rates and down payment assistance for properties in specific locations. And rural may not be as far away from civilization as you think.

* Duration of the loan. Instead of the standard 30-year mortgage, consider a 15-year mortgage instead. Lenders like the shorter term and often offer lower interest rates to incentivize borrowers. You’ll pay more per month, but you could save thousands over the lifetime of the loan.