You’re likely hearing a lot about mortgage rates lately, perhaps
influenced by recent discussions about the Federal Reserve’s meetings. It’s a
common misconception that the Fed directly controls these rates.
In reality, “mortgage rates are impacted by a lot of factors:
geo-political uncertainty, inflation and the economy, and more.” Trying to
predict when these elements will align to lower rates is a complex task, making
it futile to attempt timing the market.
Focus on What You Can Control
With many variables out of your hands, the best approach is to
manage what you can — the controllables.
Your Credit Score
Credit scores can play a big role in your mortgage rate. As 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.”
Given the current economic climate, it’s crucial to maintain
or enhance your credit score. To improve your score effectively, seek guidance
from a trusted loan officer who can provide expert advice tailored to your
financial situation.
Your Loan Type
There are many types of loans, each offering different terms
for qualified buyers. The Consumer Financial Protection Bureau (CFPB) says:
“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.”
It’s vital to explore all available loan options with your
real estate team to determine the best fit for your financial goals.
Your Loan Term
The term of your loan is another critical factor to consider
According to Freddie Mac,
“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.”
Selecting the right loan term can significantly affect your
financial health over time, so it’s crucial to make an informed decision based
on your specific circumstances.
Bottom Line
While you cannot control the broader economic forces or
policy decisions that influence mortgage rates, you can make informed choices
about your credit management, loan type, and loan term. “Remember, you
can’t control what happens in the broader economy. But you can control the
controllables.”
Connect with us to discuss how you can strategically manage
these factors to secure the most favorable mortgage rates available in today’s
market.
