3 Big Mortgage Rate Mistakes to Avoid Now That Rates Are Falling Again

The time for homebuyers and homeowners looking to refinance their loans finally emerged in September when mortgage interest rates fell to three-year low.

Although they have increased slightly since then, last week saw another decline and, overall, rates here are considerably lower than the 7% or so they were closer to for much of 2025 and beyond. And with two more Federal Reserve meetings on the calendar for the final three months of the year and, with them, expected rate cuts at both meetings, mortgage rates could soon become even more affordable. So overall there is some good news that buyers and owners can take advantage of right now.

And even though the conventional wisdom that you should improve your credit score (to position yourself on more attractive rate offers), search for lenders (to find the most affordable one) and obtain pre-approved (to improve your chances of an offer being accepted) still applies, there are other things to consider as well. In particular, it’s also essential to avoid some costly mistakes when it comes to mortgage rates now that rates are falling again. Below, we’ll look at three big issues to avoid in today’s climate.

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3 Big Mortgage Rate Mistakes to Avoid Now That Rates Are Falling Again

Potential buyers and refinancers can better capitalize on this cooling mortgage rate climate if they avoid making these three specific mistakes in today’s changing rate climate:

Thinking that rates can only go down

It may be tempting to wait until mortgage rates potentially fall even further below 6%especially since they cooled through much of 2025. But that would be a costly mistake to avoid. Mortgage rates do not decline in a clear, linear fashion, and this has been demonstrated repeatedly over the past year alone.

After mortgage rates plunged to two-year low in September 2024, they increased again in the following weeks and months. They have also risen again in recent weeks after falling to a three-year low in September (although they fell again last week). So don’t just assume that rates can only fall further from here. If you can afford current rates and want to buy a home, it’s usually worth doing so. You can always refinance when rates stabilize in the future.

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Ignoring additional savings alternatives that one can bring

Don’t just look at the rates currently offered on traditional 30-year fixed-rate mortgage terms, as ubiquitous as they are now. You can get a lower rate than you see online by clicking mortgage pointswhich serve as a fee to the lender to guarantee a lower than average rate. And Adjustable Rate Mortgages (ARMs) offering homebuyers a waiting period to qualify for a lower rate, perhaps even in the range of 5% now, although this rate is temporary and will need to be adjusted after the initial introductory rate expires. However, either option is worth exploring, especially if you only need a slightly lower rate (think around 25 basis points) to afford the home you want to purchase.

Assuming the 1% Mortgage Refinance Rule Should Still Apply

Traditionally, if an owner can obtain a new mortgage rate one percentage point or more lower than the existing ratethen it is worth pursuing. But it’s not always It is, and the current mortgage rate climate is not traditional. So don’t automatically assume that this applies to your current situation, because even rates half a percentage point lower that what you pay now can result in significant savings.

So do the math to determine what you can potentially save by refinancing now. Just be sure to factor in closing costs as well, and you should plan to stay in the home you’re refinancing long enough to recoup all of those costs, otherwise refinancing might not be worth it, even if it means temporarily lowering your current monthly payments.

The essentials

Buyers and homeowners have waited a long time for mortgage rates to drop. So they’ll want to be judicious in their approach now that they’re finally back. By avoiding these three mistakes, they can potentially capitalize on this moment, save more money and lower their monthly mortgage costs. Don’t make rash moves either. It is important to make the right decisions here to ensure affordability both now and, in theory, over the life of the mortgage in question.