You can find low interest rates on a real estate loan by choosing the right type of mortgage, improving your credit factors, and researching rates. Sometimes the lowest interest rate may not be the best choice for you, especially if you sell your home in a couple of years. To find the best financing, consider your long range plans and total loan costs.

Picking The Right Mortgage

Interest rates vary with different types of mortgages. A fixed rate mortgage starts with the higher rates, but it offers no risk of rising rates and monthly payments. An adjustable rate mortgage (ARM) has a lower rate for a set period, after which it can rise a couple of percent each year. Balloon mortgages also offer low interest rates with the rest of the loan amount due at the end of 5 or 7 years, depending on the loan terms.

Which mortgage is right for you depends on how soon you plan to move and expect an increase in your income. You will also find that an ARM or balloon mortgage allows you to borrow more than a fixed rate mortgage.

Using Other Credit Factors

Other credit factors also can lower your interest rates. A high FICO score qualifies you for low rates. A large down payment will also help reduce risk for the financing companies, thereby giving you lower rates. If you qualify for VA or FHA loan programs, you should apply. Basically, the government is backing your loan and lowering the risk level for lenders.

You can also buy a lower interest rate by paying points up front. This makes sense if you plan to stay in your home for an extended period. You want to make sure you recoup the cost.

Finding Low Rates

There is nothing like comparing rates to find the best deal. The easiest way is to request quotes from an online mortgage broker. By requesting quotes you don’t have to commit to any one lender, but still see their rates. Give as much information as possible to get an accurate quote and every discount that you qualify for.

Don’t just go to one website, go to several. Also go to individual mortgage companies’ sites to compare rates and terms. Once you find an acceptable rate, jump on it since rates can fluctuate hourly.

To view our list of recommended mortgage lenders online, visit this page: Recommended Mortgage Lenders online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.