5 ways to help you get the best mortgage rate

This one is key. A big part of a lender's decision is based on your credit score, which is affected by your payment history and how much debt you have, among other factors. Since higher scores usually translate to better interest rates, it’s a good idea to check your credit history and correct any inaccuracies before you apply for a mortgage.

Tip: If your credit score is low, you can improve it by paying off debts and making sure you can show at least six months of on-time payments.

Loans with lower down payments can be perceived as riskier, so rates may be higher. Plus, a lower down payment means your loan amount — and your monthly mortgage payments — will be larger. If you don't have much saved for a down payment, there are a number of programs that may be able to help. Visit the Bank of America Down Payment Center to search for programs in your area.

Tip: If you need or want to buy a home sooner, a lower down payment is a reasonable choice, as long as your monthly mortgage payment is affordable.

Most mortgages are paid over a term of 30, 20 or 15 years. Your rate may be higher or lower depending on the loan term you choose. Shorter terms usually get a lower rate, but keep in mind that monthly payments are higher with a shorter term. You may find it’s worth paying a higher rate so you can spread payments out over a longer term and have smaller monthly payments.

Tip: Consider your budget when you choose a loan term and balance the amount of interest you may pay against the size of your monthly payment.

Rates vary from lender to lender, so try to get more than one rate quote. One way to do that is to get prequalified^Footnote2 with several different lenders so you have a personalized estimate of how much you can borrow and what the rate may be. Once you choose a lender, you can usually apply and lock in your rate for 30 to 60 days while you search for a home.

Tip: Avoid locking in your rate too soon. If rates go up before you find a home, you may need to pay an additional fee to keep the lower rate.

Mortgage discount points are an upfront fee that you pay to lower your mortgage rate. Typically, one point equals 1% of the mortgage total and will lower the rate by 0.25%. With a lower rate, your monthly mortgage payments will be lower. However, it may take several years for the monthly savings to equal the amount you paid for the points.

Tip: Paying discount points can be worth the cost if you plan to keep the loan for a long time and you don't plan to refinance.