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The moment in the mortgage rate climate that millions of Americans have been waiting for may not have materialized just yet … but it sure seems to be close.
After mortgage interest rates declined for five consecutive weeks over the summer, they continued to fall this September. Last week, they declined to their lowest level in 11 months and, this week, they dropped again to their lowest point in almost one year. And that all comes before the Federal Reserve issues an anticipated rate reduction next week. Originally anticipated to be just 25 basis points, there’s a small but substantial chance that the first cut of 2025 now comes via a larger, half-percentage point cut. Amid these developments, mortgage applications increased by nearly 10% in just one week, the Mortgage Bankers Association noted on September 10.
While all of this is good news for homebuyers, it can’t just be passively observed on the sidelines. To take advantage of this timely opportunity, as well as any that surface in the weeks and months ahead, it helps to remember a few important items. Below, we’ll examine four worth reiterating right now.
Start by seeing how low your current mortgage rate offers are here.
4 things to remember when looking to lock in a low mortgage rate now
Don’t let excitement over a cooling mortgage rate climate make you forget these four important items:
Timing is everything
Last September, mortgage interest rates plunged to a two-year low right before the Fed cut rates, not after. In fact, rates increased in the weeks and months after. This means that waiting for the Fed to take action may not always make sense. Lenders often adjust their rate offers, sometimes in advance of any formal Fed rate activity. So, you’ll want to monitor the market closely for small but vital windows of opportunity to act. For some buyers, that may even be right now.
Compare mortgage rates from multiple lenders in one place now.
The lowest rates are reserved for those with the highest credit scores
A lower mortgage rate won’t matter much if you apply for it with a mediocre credit score. The lowest rates and best terms will almost always be reserved for those borrowers with the highest credit scores and cleanest credit histories, even now. So, if you don’t have both, get to work by checking your credit report, and explore ways to boost your credit from fair to good as quickly and as safely as possible. With uncertainty surrounding this moment in the interest rate environment, you’ll want to take these steps now so you’re better prepared to lock in a low rate, even if it only becomes available for a limited period.
Your dream home won’t wait for lower rates
“Date the rate, marry the home.” That conventional wisdom is particularly applicable right now. Your dream home may be available now, but waiting for rates to cool further may be a risky move and potentially even result in you losing your opportunity. If you’ve already located the home you want, move to purchase it now instead. You can and likely will refinance in the future. But if you wait much longer, this home may never hit the market again.
Pre-approval is still important
If you’re a buyer already visiting open houses, just waiting for the right rate to surface, it’s worth reiterating the importance of a pre-approval. Not only will this give you the information you need to budget properly and to determine true affordability, but it will also show sellers that you’re serious about any offers you make – and that you have the financial support to back them up on paper. An offer without a pre-approval is just an offer. Don’t make that mistake now, especially with limited rate opportunities available.
The bottom line
Today’s cooling mortgage rate climate is exciting and well-deserved for millions of potential homebuyers. To take advantage, however, buyers should remember these four items and apply them to their own unique homebuying approach. It took a long time to get back to this point, so it’s important to exploit the opportunity now that it’s readily available again.
