Worried About Mortgage Rates? Control the Controllables

You're probably hearing a lot about mortgage rates right now. You may even see headlines discussing last week's Federal Reserve (Fed) meeting and what it means for interest rates. However, despite what the headlines may suggest, the Fed does not set mortgage rates.

The truth is that a variety of factors influence mortgage rates, including geopolitical uncertainty, inflation, and the economy. It's difficult to predict when all of those factors will align enough for interest rates to fall.

As a result, attempting to time the market is rarely worthwhile. There is simply too much going on that you have no control over. The best thing you can do is manage the variables that are within your control.

And when it comes to rates, here's what you can do to make your relocation plans a reality.

Your Credit Score

Credit scores can significantly influence your mortgage rate. An article from CNET explains:

You can’t control the economic factors influencing interest rates. But you can get the best rate for your situation, and improving your credit score is the right place to start. Lenders look at your credit score to decide whether to approve you for a loan and at what interest rate. A higher credit score can help you secure a lower interest rate, maybe even better than the average.”

That's why it's critical to maintain a good credit score right now. With rates as they are, you want to do everything you can to get the best rate possible. If you want to improve your credit score, your trusted loan officer can provide expert advice.

Your Loan Type

There are numerous loan options available to qualified buyers, each with a unique set of terms. The Consumer Financial Protection Bureau (CFPB) states:

“There are several broad categories of mortgage loans, such as conventional, FHA, USDA, and VA loans. Lenders decide which products to offer, and loan types have different eligibility requirements. Rates can be significantly different depending on what loan type you choose.”

When working with your real estate team, make sure you understand what options are available for your situation and what types of loans you may be eligible for.

Your Loan Term

Another factor to consider is the loan's term. You have options, just as you would with loan types. Freddie Mac says:

“When choosing the right home loan for you, it’s important to consider the loan term, which is the length of time it will take you to repay your loan before you fully own your home. Your loan term will affect your interest rate, monthly payment, and the total amount of interest you will pay over the life of the loan.”

Depending on your situation, the length of your loan can affect your mortgage rate.

Bottom line.

Remember, you have no control over what happens in the broader economy. However, you have control over the variables that are within your control.

Work with a reputable lender to discuss what you can do to make a difference. By being strategic about these factors, you may be able to combat today's higher rates and secure the lowest one possible.

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