Concerned About Mortgage Rates? Focus on What You Can Control

You’ve probably been hearing a lot about mortgage rates lately. You might have even come across headlines discussing last week’s Federal Reserve (the Fed) meeting and its potential impact on rates. However, despite what those headlines suggest, the Fed doesn’t directly set mortgage rates.

The reality is that mortgage rates are influenced by numerous factors, including geopolitical uncertainty, inflation, the overall economy, and more. Predicting when these factors will align to cause rates to decrease is quite challenging.

This is why attempting to time the market is usually not worthwhile. There are too many variables beyond your control. The most effective approach is to focus on what you can manage.

When it comes to mortgage rates, here are the factors you can influence to turn your moving plans into reality.

Your Credit Score

Credit scores can significantly impact your mortgage rate. As explained in an article from CNET:

"You can't control the economic factors that affect interest rates, but you can secure the best rate for your situation by improving your credit score. Lenders use your credit score to determine both your loan approval and the interest rate. A higher credit score can help you obtain a lower interest rate, potentially even better than the average."

This makes it even more crucial to maintain a good credit score at this time. Given the current rates, you should aim to secure the best rate possible. If you want to work on improving your score, your trusted loan officer can provide expert advice to assist you.

Your Loan Type

The Consumer Financial Protection Bureau (CFPB) outlines that there are various types of loans, each providing different terms for eligible buyers.

"There are several main categories of mortgage loans, including conventional, FHA, USDA, and VA loans. Lenders determine which products they offer, and each loan type has distinct eligibility criteria. Interest rates can vary significantly based on the type of loan you select."

When collaborating with your team of real estate professionals, ensure you explore the options available for your circumstances and determine the types of loans you might be eligible for.

Your Loan Term

Another aspect to think about is the duration of your loan. Similar to loan types, you have choices available. According to Freddie Mac:

"When selecting the ideal home loan, it's crucial to factor in the loan term, which dictates the duration of time required to fully repay your mortgage and own your home outright. The loan term influences your interest rate, monthly payments, and the total interest paid throughout the loan's lifespan."

Your mortgage rate may vary depending on the length of your loan, depending on your situation.

Bottom Line

Keep in mind, you can't influence broader economic changes, but you can manage what's within your control.

Let's connect to discuss actionable steps that can impact your situation. By strategically addressing these factors, you may mitigate the impact of current higher rates and secure the most favorable rate available to you.