The interest rate you pay for your mortgage is derived from a number of factors. Economic factors determine interest rates in general; mortgage lenders discount or mark up the rates they charge depending on their individual markets and customers. Economic factors such as inflation are out of your control. There are however, factors you can control to ensure you are receiving the best interest rate for your mortgage.

The first factor you can control is your credit. Before you start shopping for mortgage lenders make sure your credit is in order. You need to verify the information contained in your credit reports and dispute any errors you find. The information in these credit reports, there are three different reports, is used to calculate your FICO credit score.

Lenders use your FICO credit score to determine how much of a risk for lending you are. If you are an acceptable risk your credit score influences the interest rate the lender you choose will charge you. By improving your credit score you are improving the interest rate that you are able to qualify for with or without paying points.

You can improve your FICO credit score by paying down the balances on your credit cards and closing cards you do not need. Make sure you are making all of your payments on time and have at least six months of on-time payments under your belt before you start applying for mortgage loans.

Because interest rates vary from one lender to the next shopping for the best mortgage can save you a lot of money. When you shop for a mortgage lender make sure you ask for no-obligation quotes. A no-obligation quote allows the lender to give you a mortgage quote without the lender accessing your credit report. Whenever a lender accesses your credit report a credit inquiry is logged on your history. Too many credit inquires over a short period of time can damage your credit score.

It pays to shop for mortgage lenders to find the best interest rate for your mortgage; however, you need to shop smart to avoid making common mortgage mistakes that can cost you thousands of dollars. To learn how to avoid these mistakes sign up for a free mortgage guidebook.