Buying your first home is an event unlike any other you will go through in your life. For the first time, you will have control over who gets to come over and customize it to best suit your needs. However, you will always have to find a way to pay for it, which means getting a mortgage. How can first-time buyers get the best possible interest rate on their loans?

You May Be Able to Buy Points

When you buy points, you are prepaying some of your interest, which means you will pay a lower interest rate during the life of the loan. On a 30-year mortgage, you could save thousands of dollars just by shaving a few tenths of a percent off of your interest rate. You will also have to pay less per month, and you could use that money to make additional mortgage payments to pay the loan off faster.

Offer to Make a Larger Down Payment

The interest rate on your loan is a representation of the risk that you pose to the lender. By making a larger down payment, you leave yourself with less to borrow overall. Therefore, you lower the risk to the lender, which could result in a lower interest rate. The amount that your rate is lowered will be determined by your lender and those who underwrite the loan itself. Ideally, you will pay at least 20 percent of the purchase as a down payment to build equity and get the best loan terms.

Don't Be Afraid to Ask

In some cases, you can get a lower rate just by asking. If you work with a broker, he or she may have access to a variety of loan programs from lenders who offer rates that may not be advertised online or on TV. Smaller or local lenders may also be willing to give you a lower rate if they think that they can develop a long-term relationship with you.

Check Your Credit Before You Apply

You will want to check your credit before you apply for the loan. Generally, those who have higher credit scores will be the ones who get the best rates. If your score is below 700, you are likely to pay higher rates while those with scores under 640 may not be approved at all. Therefore, it is critical that you have good credit as it shows you are responsible with money and will be a good candidate to make payments over the next 10, 20 or 30 years. If your credit score needs improvement, consider consulting with the professionals. According to the reviews on Lexington Law, a credit repair company may be able to start improving your credit score in as little as a few months.

Wait to Lock in Your Rate

Ideally, you will lock in your rate at least 30 days before closing. This is done to make sure that you know what you rate is long before you sign your mortgage paperwork. However, if you think that interest rates will go down in the weeks or days before you are due to close, don't be afraid to delay locking your rate. If you have already locked in your rate and find out that it has gone down before you sign your loan documents, make sure that you demand the lower rate before the loan is official.

Over the life of a mortgage, you may pay as much or more in interest than the principle balance of the loan. Therefore, reducing your interest rate by even a few tenths of a point can save $10,000 or more, which is the equivalent to several months’ worth of payments. Even if this is your first time buying a home, knowing how interest rates are determined can help you create a strategy to lower it by a tangible amount.