Your mortgage rate, also known as the interest rate on your home loan, plays a huge role in how much you’ll actually be paying for your home in relation to the purchase price. Percentage points here or there on such a large amount of money over years can add up to thousands of dollars.

Sometimes, it seems as though lenders just wake up and pick the first number that pops into their mind, but there is much more to the process than that. Here are some common factors that may end up affecting your mortgage rate.

The Lender

The different policies and restrictions of specific lenders play a role when it comes to your mortgage rate. Some lenders tend to be more conservative than others, but if a handful of conventional lenders are competing for your business, you might get a break on your rates.

The Borrower

The borrower, that’s you, also has a lot to do with what mortgage rate is offered. Your credit score is one of the factors that make a difference. That’s why it is important to take your credit seriously when you’re younger, and as you get into the workforce. You never know when a bad credit decision could come back to cost you in the future.

Funds Available

The economy has a connection with the real estate world, that not many homebuyers realize. Basically, the amount of money available out there for banks and other institutions to lend will help determine the rates.

Here’s an example: A wide segment of the public decides to deposit money in savings accounts for whatever reason, resulting in a high number of funds available. With more funds available, the market is called “loose” and the mortgage rates will drop. In a situation where investors put their money elsewhere and there is a shortage for mortgages, it’s known as a “tight” market and mortgage rates rise.

Factors You Can Control

As an individual, you have limited control over many of these factors, but you can help yourself to a certain degree. Along with looking after your credit, take some time to shop around when it comes time to find a mortgage. The fact that not all lender follow the same rules means you may find a better deal by shopping around.

If you’re able to create a relationship with a certain lender, and use them for multiple deals or transactions, you may be able to get a break on a mortgage rate when the time comes. Just remember that you are not being forced to accept the first number you hear, or any number you hear. Take your time and you’ll find a mortgage rate that works perfectly for your situation.