One can almost always get a lower rate by choosing an Adjustable Rate Mortgage (ARM), or one with a fixed rate period of only the initial 2, 3, or 5 years. These type of mortgage loans with an initial Fixed Rate Mortgage (FRM) followed by an Adjustable Rate Mortgage are also known as Hybrid Mortgages. In a normal interest rate climate, ARM's and Hybrid Mortgages such as the 2/28 and 3/27 have lower interest rates. This is due to short term rates, those used by Adjustable Rate Mortgages and Hybrids, are usually lower than long term rates, which the 30 year Fixed Rate Mortgages are based on. Many young couples starting a family never intend to live in their houses for more than a few years. Adjustable Rate Mortgages, 2/28, 3/27, and 5/25 are ideal for them because of their lower starting rates.

If for some reason a homeowner cannot get a lower rate, then he may be able to get a mortgage with a lower payment. One can lower the monthly payments by taking an interest-only loan (which does not require repayment of the principal owed until a later day), increasing the amortization schedule (from a 15 Year Fixed Rate Mortgage to a 30 Year Fixed), or in some cases get a Pay Option ARM (which allows the homeowner to choose among four payment options every month).

One can sometimes get a lower interest rate by putting a bigger down payment towards the purchase. One way banks assess risk is to examine the Loan-to-Vaule Ratio (LTV). The more down payment, the lower the LTV, and the less risk in making the loan. The higher the LTV, the higher the default risk the bank has to bear. Some banks reward borrowers putting down large down payments with slight lower interest rates.
Depending the state you are in, if you opt to escrow your taxes and insurance your rate may be lower. Having the bank collect for taxes and insurance on a monthly basis and pay them when they become due alleviates the concern and eliminate the possibility that the homeowner ignores to pay them and create possible tax liens or even face foreclosure.

For home buyers with bad credit profiles, they may want to "repair" their credits prior to applying for a mortgage. Depending on the loan borrower's situation, he can better his credit by correcting erroneous entries in the credit reports, openning or closing accounts thereby increasing or decreasing the total amount of credit extended to them. With some planning, any of these measures could drastically change the credit scores, and put the homebuyer in a position to achieve a lower mortgage rate.

One way to get a lower rate on your mortgage is to obtain a mortgage on a buy-down program. A 2/1 buydown is a common type of buydown program. What this means is that you will have pay a fee to be able to get an initial interest rate that is 2% lower than the final interest rate for the first year of the loan, the next year the rate will go up 1% and then the 3rd year the interest rate will be fixed for the life of the loan. This type of loan helps out people who are very close to their maximum debt ratio that is permitted by the bank, and also people who may want to qualify for a little more expensive of a home.

The old wise tail states that in order for a refinance to "make sense", the interest rate of the new loan must be at least 2% lower than the current mortgage. This is simply not true any more. With the wide array of new mortgage products such as Hybrid Mortgages and Pay Option ARM's, it may make economic sense to refinance even if the new interest is only slightly lower. As long as the savings outweigh the closing costs, it really doesn't matter how much lower is the new rate.