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Shopping for the lowest mortgage rates is essential to save you thousands of dollars.

You need to do upfront research to have an idea of what you want, then see who can get it for you.

No. 1: Establish a Plan

Get a referral from someone.  The first lender you talk to can help you compare FHA and Conventional financing as well as various loan terms so you can make an informed decision on which loan program and term when you talk to other lenders.

No. 2: Raise your Credit Score

How much can a good credit score improve your interest rate?

Most lenders require a minimum credit score of 620 to 640. "Typically, a credit score of 740 or higher puts borrowers in the best tier for a conventional loan program," says Michael Smith, first vice president â business development manager for mortgage lending for California Bank and Trust in San Diego.

No. 3: Decide how long you'll keep the loan

This is important as it can change the kind of mortgage you choose. if you are risk-averse you might choose a fixed-rate home loan for maximum safety. But, if the property will only be kept for a few years, you can be perfectly safe with a 5/1 hybrid mortgage and pay about 1 percent less in interest. Shorter loan terms can get you a lower rate.

No. 4:  Ask about Fees

Ask for the amount it will cost to close the loan, the mortgage with higher fees should have a lower interest rate. Some lenders blend all their fees into a loan preparation fee, while others separate them out.

No. 5: Always provide the same information

The quality of your credit

The location, type, and use of your property

Size of your down payment or the amount of home equity you have

No. 6: Call lenders on the same day

If you can, call within the same timeframe (the morning or afternoon), because a bond rally could mean that mortgage rates have dropped dramatically from the morning to the afternoon.

No. 7: Interview lenders and decide

No. 8: Don't comparison shop by APR

No. 9: Know when you want to close

No. 10: Decide if you'll pay points

Ask the lender how your loan will be structured...are you paying points or not?

If you plan to stay in your home lets say 10 years or longer, you may want to pay points in order to keep the interest rate as low as possible for the life of the loan you chose. If you plan to sell in a few years , paying more cash to points upfront, may not be worth it. A lender should show you the difference in interest and monthly payments to help you decide whether or not to pay points. Dated: November 2nd 2015
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