Getting the best 30-year mortgage rate possible can save you thousands of dollars a year. With mortgage rates recently hitting their lowest level since April 2023, many homeowners are taking advantage of the opportunity to refinance and secure a better rate. According to Redfin, the average 30-year mortgage rate has dropped to 6.34%, the lowest it has been in quite some time. While rates have slightly increased since then, experts predict that they will fall later this year when the Federal Reserve cuts rates.
The Federal Reserve recently held interest rates steady for the eighth consecutive time, keeping the federal funds rate at a target range of 5.25% to 5.5%, the highest it has been in 23 years. However, it is expected that there will be at least one quarter-point cut later this year. This anticipated cut is likely to boost banks‘ lending margins and result in a further reduction in mortgage rates.
Currently, the 30-year mortgage rate stands at 6.47%, down from 6.73% last week and 6.90% last year. This rate is lower than the long-term average of 7.73%, making it an attractive time for homeowners to consider refinancing or purchasing a new home.
To secure the best possible mortgage rate, there are several strategies that homeowners can employ:
1. Raise your credit score: Your credit score is a significant factor in determining your mortgage rate. By increasing your FICO credit score, even by a small amount, you can save hundreds of dollars on your mortgage. Making timely payments on your credit cards and keeping balances low can help improve your credit score.
2. Increase your down payment: Making a larger down payment, ideally at least 20%, can help you secure a better mortgage rate. A higher down payment means you will have to repay less principal and interest over the life of the loan.
3. Get multiple quotes: Different lenders may offer varying rates, so it is essential to shop around and compare offers from multiple lenders. This will ensure that you are getting the lowest interest rate available to you.
4. Consider an adjustable-rate mortgage (ARM): If you plan to sell your home in the near future, opting for an ARM could be a wise decision. ARMs typically offer lower initial interest rates, which can result in savings if you sell your home before the rate adjusts.
By implementing these strategies and staying informed about market trends, homeowners can increase their chances of securing the best 30-year mortgage rate possible. With rates currently at historic lows, now is an opportune time to explore refinancing options or lock in a favorable rate for a new home purchase.