Though most mortgage rates vary by location and bank, the market tends to dictate the high’s and low’s based on a variety of factors, the greatest of which is the interest rates set by the Federal Reserve, in the form of prime rates.

Usually, home loan rates are set just above the prime rate, so the lower the prime rate goes, the lower home loan rates go.

The problem with relying on the prime rate to signal when to buy a house is that the prime rate is lowest when the economy is at its worst, such as the period in the latter 2000’s, and even in 2011. The good news is that when buying a home when the economy is down means you’ll likely get a much better deal, with the downside being that it’s hard to tell if you’re buying during a decline in home values, or if they are at the bottom and trending upwards.

Either way, if you plan on buying, then the best way to get low home loan rates is to have good credit and a low debt to income ratio. In other words, pay off what you can on your credit cards and loans before applying for a mortgage. Doing this will also help you get approved with more purchase power.

While it’s quite typical to see lower rates on 15 year and variable rate mortgages, the most popular package is a 30 year fixed rate loan, where you might pay an additional percent of interest, but will have the luxury of 30 years of fixed payments.

Going with an adjustable mortgage might sound good, but usually the rates skyrocket after the first five years, forcing homeowners to refinance or sell because the payments have gotten beyond their control.

There are several websites that list current home loan rates, but most banks and credit unions post them both online and in their local offices. As of 2011, the lowest rates are just over 3%, while the average is around 4-5%. For those with bad or damaged credit, rates will hover closer to 5-10%, depending on credit score and money down.

If you’re really concerned about getting the best rate on your home purchase, then ask your lender about paying down the rate and/or points. Usually, most banks will give you a reduce rate in exchange for a larger up front sum.