A house is the largest purchase most people are ever going to make. A house is a place to live, but more importantly, a house is an investment in the future. The total amount a homeowner invests is the cost of his or her mortgage, while the homeowner's return is the equity that appreciates in excess of that mortgage. The math is simple: People who want the greatest return on their investment will look for the best mortgage rates they can find.

What's the best mortgage rate? That depends upon the amount of risk a prospective homeowner is willing to assume. Two financing options are available for mortgages, fixed rate loans and variable rate loans. Variable rates carry greater risk but also the possibility of greater rewards.

A fixed rate loan is one in which the loan's interest rate remains constant for the life of the loan. This has some advantages. Homeowners on a tight budget will always be able to predict how much they will have to pay each month, and they are protected from changes if national mortgage interest rates rise.

Variable rate loans, on the other hand, accrue interest on the basis of the average of current national rates. If the general state of the economy is favorable, then interest rates are appreciably lower than comparable fixed mortgage rates. Conversely, if national interest rates rise, the homeowner with an adjustable mortgage will be paying more.

What are other factors that can affect how homeowners can find the best mortgage rates for their future?

Mortgage rates vary widely according to lender, so it's critical that prospective homeowners research a number of financial institutions before signing on the dotted line.

Before sitting down with a mortgage broker, prospective homebuyers should have a realistic understanding of just what they can afford. This means doing a thorough review of their financial situation. What salary do they take home? How secure is their job? What prospects do they have for earning more money in the future? What debt are they carrying, and what kind of debt? Is it relatively low interest student loans or high interest credit card debt? Homebuyers should also review credit reports from all three major credit-reporting bureaus carefully. Correct the mistakes; have explanations ready for any late payments.

After that homework is done, it's time to talk with a lender about a loan.