The largest purchase many consumers make is buying a house. So it's not surprising that more than half (52%) don't shop around to find a lender. This is like buying the first car that you see or trusting one gas station always to offer the best price.

This oversight could be costly to your finances. For example, it could lead to you paying thousands of dollars more in interest over the loan's life by not comparing the terms of mortgage loans from different lenders.

Check Your Credit Score

You will get the best rate by ensuring your credit score is in order.

When pricing your loan, most lenders will consider your Fair Issac credit score or FICO credit score. The interest rate you will pay usually lowers higher your FICO credit score.

Find out your FICO credit score. They range from 300 to 850. FICO.com is a website that allows you to order your FICO credit score from banks and credit card companies.

FICO offers a tool that allows you to calculate the rates you can expect for different credit scores. These rates are expressed in annual percentage rate (or APR) estimates. This is the interest rate and other costs spread over 30 years.

If Necessary, Raise Your Credit Score

You can improve your FICO credit score if it is lower than you would like. This process should be started long before you contact mortgage lenders. It can take months or even years to see a difference in your credit score, depending on where you begin and your goal.

You can find various free apps that will help you create a budget or improve your spending habits. Or you can contact an approved housing counseling agency. Many will provide online, telephone, and in-person options. These agencies should provide free information about their services and fees. Consider moving on if a service does not provide this information.

The Consumer Financial Protection Bureau lists warning signs of credit repair scams as companies that demand payment before providing services, which is illegal or promise a specific increase in credit score. These companies should not be trusted.

For Errors In Your Credit Report, Check It Out

FICO credit scores are based on credit information. It's amazing how many errors there are. These errors can make it more difficult for you to qualify for a lower interest rate or get approved.

You can request a free copy of your credit report from any of the three agencies Equifax or TransUnion. In addition, you can find information on how to dispute an entry on the agencies' websites.

Copies of all documentation (e.g., acknowledgment letters from creditors) should be included regarding entries that you are disputing.

Comparison Shop

Once your credit score is in order, it's time to meet with lenders. You will notice that we used plural lenders. Comparison shopping is an excellent way to ensure you get a loan estimate that you like. Make sure to compare the interest rates and fees, as these will affect the APR.

Place 20% Or More Down

Lenders will want to know how much they are willing to deposit. Of course, the more money you have, the less you will need to finance.

To reduce the cost of private mortgage insurance or PMI, some buyers will pay 20%. As a result, you might be more competitive and stand out from the seller if you put 20% down. It may also help you qualify for a lower interest rate that can save you thousands of dollars over the term of your loan.

Some buyers may find it challenging to save enough for a downpayment. Consider local housing agencies offering assistance to home buyers if your down payment resources are limited. Downpayment Resource provides a free tool to assist you in finding programs in your local area.

Pay Points

You can lower your interest rate by paying mortgage points (also known as a discount point). Points are fees that you pay directly to the lender when your loan is closed. For example, one point equals 1% of the mortgage amount or $1,000 per $100,000. This allows you to pay some interest up front for a lower rate. The cost could also be tax-deductible.

If you intend to keep the house for an extended period of time, it is a good idea to consider paying points.

Avoid Large Credit Purchases

Your lender has used your monthly income and debt to calculate your debt-to-income ratio (or DTI). The amount should not exceed 43% of your pre-tax income.

You can finance major purchases like furniture, carpeting, and appliances before your loan closes. However, this could increase your DTI, delay your loan closing, or cause the loan to be turned down in extreme cases.