To understand how to get the best mortgage rates, you first need to understand lenders’ attitudes towards risk. For lenders to mitigate the risks that are involved in lending large amounts of money, they need various tools at their disposal. And mortgage interest rates are just one of them.

Generally, the higher the chance that a borrower won’t meet their obligation, the higher the interest rate on the loan. So, to get the best mortgage rates, lenders need to present themselves as lower risk. Fortunately, there are a few ways to do that.

Lenders break loans up into Prime, Alt-A, and subprime mortgages. The best rates are afforded to prime mortgages. To apply for these rates, lenders will look for a:

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James Marchese

James Marchese is the President and Chief Executive Officer of Mortgage NOW, Inc., an unsupervised title II residential mortgage lender.