Navigating Mortgage Rates: Taking Control Where You Can
You're probably inundated with news about mortgage rates lately. Headlines may even suggest that last week's Federal Reserve meeting will impact rates. However, the Fed doesn't directly determine mortgage rates, despite what the headlines imply.
The truth is, mortgage rates are influenced by numerous factors: geopolitical uncertainties, inflation, economic conditions, and more. Pinpointing when all those factors will align for rates to drop is challenging.
Attempting to time the market is generally futile. Too many uncontrollable factors are at play. The best approach is to focus on what you can control. When it comes to rates, here's what you can influence to make your moving plans a reality:
Your Credit Score
Your credit score can significantly impact your mortgage rate. As 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 evaluate 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, possibly even better than the average."
Maintaining a good credit score is crucial now. With current rates, you want to do whatever you can to get the best possible rate. If you want to focus on improving your score, your trusted loan officer can provide expert advice.
Your Loan Type
Various loan types offer different terms for qualified buyers. 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 professionals, ensure you understand what's available for your situation and which types of loans you may qualify for.
Your Loan Term
Another factor to consider is the loan term. As 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 also change your mortgage rate.
Bottom Line
Remember, you can't control what happens in the broader economy. But you can control the factors within your power. Work with a trusted lender to explore the options that'll make a difference. By being strategic with these factors, you may be able to combat today's higher rates and lock in the lowest one possible. Need a lender? Contact us today and we will connect you with our local favorites.
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