FINDING THE RIGHT MORTGAGE RATE

What you need to know

Finding the best mortgage rate can be tricky, whether buying your first home or trying to refinance your existing one. Here are some tips for getting the best rate:

Three major credit bureaus -- Experian, TransUnion and Equifax -- collect the information that makes up your credit history. This information is used to formulate your credit score.

You can improve your credit score through the following steps:

1. Know how much house you can afford before looking for a mortgage.

2. Find out your credit score. If it's a bit low, try bumping it up before applying for a mortgage. If your score is already good, keep it there by not closing any credit accounts and by not applying for new credit.

3. Check and compare to find the best mortgage rates in your area.

4. Get all necessary financial paperwork together before meeting with a lender, including:

Tax returns for the past two years.
W-2 income statements.
Two most recent pay stubs.
Most recent credit card statements.
Most recent bank and investment account statements.
Divorce decrees and child-support documents.
Your budget.

The most important qualifiers for acquiring the lowest mortgage rate possible are to have:

Good credit score.
Low debt-to-income ratio.
20 percent down payment (if buying your first home).