5 steps to get the best possible mortgage rate

House on mortgage

If you're in the market for a home, there are five things you can do right now that will help you qualify for the cheapest possible mortgage. The tantalizing low rates lenders put in their ads are for borrowers with the best credit history, substantial down payments and the biggest gap between how much they earn and how much they owe each month.

Most of us will have to pay more. The only issue is how much more.

Nathan Russo, vice president of Action Mortgage, in Cranston, R.I. explains what happens to those who don't meet the criteria for the lowest rates: "About a month ago, we found a mortgage for someone at 10.5%. He had a low credit score and no down payment." And that was for a five-year, adjustable-rate Mortgage.

"It was either that or 13% for a 30-year fixed," Russo says. "He took the ARM because he could get it at a better rate, and he will either move or refinance within five years." Russo adds that many people, usually first-time buyers, fall into the same category, "but they still want to be homeowners."

Of course, you can't undo the damage a bunch of missed payments have done to your credit report, or save another $20,000, overnight.

But every quarter-point is worth fighting for, so here's what you can do: 

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