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The recent trend of mortgage rates the fall does not seem to be over.
30-year mortgage rates fell again this week, according to new data from FreddieMac. Averaging just 6.27% currently, rates here are at their lowest level in about a month. While not as affordable as the 6.13% they reached before the Federal Reserve cut rates in September (a the lowest in three years at the time), they are getting back on the right track for buyers wanting to re-enter the market.
But that also doesn’t mean buyers should rush through the process, especially given the unique climate they find themselves in now. While it’s always important to be strategic in the home buying process, this is arguably especially the case now, with things like inflation, interest rate policy, and national economic policies all playing a role. By taking selected actions (and avoiding others) now, buyers can improve their chances of success. Below, we detail two things to do and two more to avoid now that mortgage rates are falling again.
Start by seeing what mortgage interest rate you could qualify for here.
What Buyers Should (and Shouldn’t) Do Now That Mortgage Rates Just Dropped Again
To take advantage of this new affordability in the mortgage market, homebuyers should consider the following do’s and don’ts now:
Do: Get pre-approved
A mortgage pre-approval can go very far. Not only will this let you know how much loan lenders will realistically approve or not approve for you, but it will also help you better tailor your home search. This will also show sellers that you are serious about any offers you submit and that you have the financial backing and documentation to support that offer. Many sellers will not even deal with a buyer who does not have a formal agreement pre-approval to accompany any offer. So don’t be one of those buyers. Get pre-approved now.
Learn now how to get pre-approved for a mortgage.
Don’t: Assume rates will continue to fall
It can naturally be tempting to assume that mortgage rates will continue to fall, especially considering they were around 7% at the start of this year. It therefore seems logical, on the surface, to wait for them to fall further. But mortgage rates don’t always move linearly. They can easily rise again if market conditions change.
And you don’t have to look far to see an example of this, since it just happened last year. Mortgage rates in September 2024for example, plunged to a two-year low just before the Fed cut rates, but then rose sharply in the months that followed. Don’t let this happen again. If you can afford current rates and want to buy a home, do so. You can always refinanceif rates continue to fall in the future.
Do: Start looking for accommodation
As mentioned, if you can afford today’s rates and don’t mind jumping into house hunting as the holiday season approaches, it’s worth starting now. This doesn’t mean you have to visit the first open house you see listed. However, this means narrowing down your search to select zip codes, searching real estate agents and maybe even lawyers. And that can extend to making appointments to tour homes you’ve found online. The new rates provide new home buying opportunities, and these will be more easily accessible to aggressive house hunters. Which brings us to the next point…
Don’t: Assume Conventional Seasonal Rules for Buying a Home Apply
Spring is the traditional season for home buyers. The cold weather is over, it’s easier to see homes both inside and out, and if you find a home that you ultimately decide to buy, you can schedule the closing to take place in the summer and you can move in then, before school starts in the fall. But it would be a mistake to assume that the conventional home buying season will once again be in March and April.
New lower rates will immediately attract more competition, potentially distorting the timeline. Don’t assume there will be fewer buyers to compete with now, as there would be if you were typically buying a home in the fall. There’s a lot of pent-up demand, and as rates move closer to the 5% range, more buyers are expected to resurface. Be prepared to face longer lines at open houses, more competing offers, and less flexibility from sellers than you normally expect this time of year.
The essentials
Further declines in mortgage rates could create exciting new opportunities for homebuyers. But there will also be some mistakes to avoid in this environment. By adopting the approaches above and avoiding some of these easy-to-make mistakes, buyers can make these new opportunities work for them both during the buying process and, ideally, throughout their long homeownership journey.
