Getty Images
In the spring of 2024, many buyers expected an adjustment in the mortgage rate climate. With meInflation cools significantly towards the end of 2023 – and the prospect of rate cuts thanks to the Federal Reserve summit – many were optimistic that this spring home buying season would be better than the last one. Unfortunately, this relief has not yet arrived and perhaps later than expected.
With the most recent inflation report showing a rise and with the prospect of a decline in this week’s report uncertain, some buyers might want to start thinking about their next steps if rates stay where they are. And with a Fed official recently discussing maintaining unchanged prices, it may be worth considering the next steps now. Below, we’ll detail three things homebuyers can do this spring if mortgage rates don’t drop as expected.
Start by exploring your mortgage rate options here to determine your eligibility.
3 Things Buyers Can Do This Spring If Mortgage Rates Don’t Drop
Here are three steps buyers should consider taking this season while they wait for rates to drop.
Boost your credit score
Until the pricing environment improves, buyers should do everything possible to ensure their buyer profile has improved during this time. This means reducing debt, not applying for new credit, and doing what you can to improve your credit score as much as possible. Remember that the lowest mortgage rates and the best conditions will be reserved for people with the cleanest profiles. So if you’re already waiting anyway, it makes sense to improve your credit so you can more easily qualify for a low rate when it eventually drops.
See what mortgage rate you could get here now.
Consider all alternatives
Although you may have planned to apply for a conventional 30-year mortgage, you may not have considered current rates. Given that they are as high as they currently are, it might be worth exploring other ways to reduce them. This may involve paying a lender directly to get a lower rate (mortgage points) or give up the security of a long-term rate and instead seek a lower short-term rate (a variable rate mortgage). And, for some, it may be helpful to explore the benefits of a 15 year mortgage instead, if the goal is to get the lowest rate while paying off the new home as quickly as possible.
Act anyway
Of course, mortgage rates today are not ideal, but they are not abnormally high either. Over the past decades, mortgage interest rates have often been in the double digits, making the current average rate of 6.99% for a 30-year loan relatively inexpensive. And if waiting for a rate cut means having to pass on the Dream house that was recently listed, you should seriously consider moving now. This house may never be listed again, but rates are cyclical and they will go down at some point, at which point you can refinance at the new, lower rate in effect.
The essential
While no mortgage rate cuts have occurred in the first months of 2024, it’s unclear what might happen in the remaining nine months of this year. However, while waiting for positive developments, buyers should do everything they can to improve their credit score and improve their financial attractiveness as a buyer. And they should seriously consider other ways – like adjustable-rate mortgages and mortgage points – to get a lower rate. Finally, for some buyers, it may be worth taking action anyway if the alternative means losing a rare home-buying opportunity.
Do you have more questions about the home buying process this spring? Learn more about your mortgage options online today.
Grub5
