Staring down a steep mortgage rate is the nightmare of any potential homeowner, and many of those who dream of one day owning their own houses are stymied solely by ridiculous rates that they never understood when they first made their purchase. There are many factors that determine a person’s home mortgage rate, some of which are more important than others. If homeowners want to avoid a bad deal and learn more about how they should make future purchases, they need to review the most important factors.

These are the 5 factors that determine your mortgage rates more than anything else, and where you can learn more about them.

1. Where your home is

Easily one of the most important factors that determines a home mortgage rate is the geographical location of your home. This is one of the simpler factors that many home owners find easiest to understand; if your home is in an area with incredibly high property values, you should be expecting a substantially different rate than those in less-valuable neighborhoods. Lenders may even offer you a certain interest rate depending on which state you live in.

Finally, rural and urban areas often have drastically different mortgage rates. Before you even consider purchasing property, thoroughly review the mortgage rates of the geographical areas you’re considering to determine which has the best deal for you.

2. The Fed’s decision

The Federal Reserve’s decisions regularly impact the housing market across the country. That’s because special decisions regarding interest rates can seriously impact the mortgage rates that would-be homeowners around the nation end up paying. A rate hike, for instance, which sees short-term interest rates temporarily raised depending on how the economy is doing, could end up generating higher borrowing costs around the country.

Homeowners who haven’t heard about the Federal Reserve’s impact on the housing market need to stop what they’re doing and brush up on how rate hikes affect mortgages.

3. Your down payment

What few soon-to-be-home-owners realize is that their down payments can drastically impact their mortgage rates, too. Homeowners who can make huge down payments are more likely to convince lenders and banks that they have sound credit, and can be trusted with lower interest rates. For many couples and individuals looking to buy property for the first time, saving up to make an extra-large down payment  from a list of hard money lenders is one of the most common ways of achieving a relatively lower mortgage rate.

If you fail to hit a certain level with your down payment, your mortgage rates could be substantially higher than your neighbors. Read up on how important it is to use a down payment to show lenders you’re ready for a low interest rate if you’re curious about how down payments ultimately shape the mortgage rate decision.

4. Is your mortgage fixed or adjustable?

Your mortgage rate is also seriously impacted by what type of mortgage you ultimately end up getting for your home. A fixed rate mortgage could see homeowners paying drastically different fees than an adjustable mortgage, for instance. Fixed rate mortgages see the interest rate permanently set from the start of the loan, whereas adjustable mortgages could see your rates go either up or down. That latter part in particular is important; homeowners who aren’t keeping a close watch on their payment schedule could be surprised to discover that they actually owe more money per month after a few years.

Always keep in mind that adjustable mortgages often include drastic increases or decreases in the interest rate sometime after the loan has been issued, unless you want to end up dealing with steep payments that you can barely manage.

5. Your personal credit score

Though some potential homeowners may not be happy to hear this, it’s also a simple matter of fact that lenders are very interested in your personal credit score and credit history when it comes to determining your mortgage rate. Barely more than half of all housing units in America are owned by the people who live in them, meaning it’s imperative that lenders gain a comprehensive understanding of who they’re giving money to before a loan can fully be issued. Individuals with relatively shaky credit histories with find it very difficult to attain a mortgage interest rate at a lower-than-standard rate.

Credit scores can be improved, however, and lenders are often more interested in the overall performance of the market, current monetary and fiscal policies in Washington, and the location and health of your local housing market more than anything else. While mortgage rates can rapidly fluctuate in certain rare circumstances, home ownership remains too enticing an economic opportunity for most to pass up. Keep reading up on the factors that determine your mortgage rate, and you’ll be amongst the ranks of homeowners in no time.