3 Smart Moves That Could Help With Your Mortgage Rate

If you’re thinking about buying a home, affordability is probably one of the biggest things on your mind. And with mortgage rates moving higher again lately, you may be wondering if it makes more sense to wait and hope rates come back down.

The truth is, no one can predict exactly where mortgage rates will go next. Right now, they’ve been moving in the opposite direction.

Mortgage rates can be influenced by quite a few things, including inflation, economic data, oil prices, what’s happening overseas and decisions made by the Federal Reserve. As Danielle Hale, Chief Economist at Realtor.com, recently explained, the pressure on mortgage rates was already there before the Fed’s latest rate hike.

That may not be the news you were hoping for. But here’s the good news: you don’t have control over where mortgage rates go, but you do have control over several things that can affect the rate you qualify for.

So, what can you focus on? Let’s take a look.

Work on Your Credit Score

Your credit score can have a big impact on the mortgage rate you qualify for. Even a small improvement may help you qualify for better loan terms and could make a difference in your monthly payment.

Freddie Mac notes that a higher credit score can give you more loan options, including potentially better terms and a lower interest rate.

If you’re not sure where your credit stands, this is a great time to check. And if there’s room for improvement, talk with a trusted lender about what steps you can take before applying for a mortgage.

Explore Your Loan Options

Not every home loan works the same way and the loan you choose can affect both your interest rate and monthly payment.

There are conventional, FHA, VA and USDA loans, along with different loan terms such as 15, 20 and 30 years. You’ll also want to understand the difference between fixed-rate and adjustable-rate mortgages and what the tradeoffs could mean for you down the road.

The right choice really depends on your financial situation and your plans for the home.

This is where having a good lender can make a big difference. Ask questions, compare your options and make sure you understand both the benefits and the potential costs before deciding. It can also be helpful to talk with more than one lender so you can compare what’s available.

Consider a Newly Built Home

Here’s another option that may be worth looking into.

Some builders are offering incentives that help buyers get a lower mortgage rate. These rate buydowns can reduce the monthly payment and make a new construction home more affordable than you might expect.

Recent Realtor.com data also showed that buyers of newly built homes were getting lower average mortgage rates than buyers of existing homes.

If keeping your monthly payment manageable is a priority, ask your real estate agent about new construction communities in your area and whether any builders are currently offering financing incentives.

Bottom Line

There’s a lot about the housing market and mortgage rates that we simply can’t control. But that doesn’t mean you’re completely at the mercy of the market.

Your credit, your loan options and even the type of home you choose can all play a role in what your monthly payment looks like.

If buying a home is still part of your plan, don’t let the headlines make the decision for you. Start by understanding your numbers, talk with a trusted lender and look at what options are actually available to you.

And when you’re ready to explore what’s out there, I’m always happy to help you take a closer look at the local market and find an option that makes sense for your budget and your goals.