You’ve probably heard a lot about mortgage rates recently. Headlines may talk about the Federal Reserve’s (the Fed) recent meeting and its impact on rates. However, the Fed doesn’t directly set mortgage rates, despite what the headlines might imply.
The reality is that mortgage rates are influenced by various factors, including geopolitical uncertainty, inflation, and the overall economy. Trying to predict when these factors will align for lower rates is challenging.
Therefore, attempting to time the market is generally not advisable. There are too many external influences that you can’t control. The best approach is to focus on what you can control.
Here’s how you can influence mortgage rates to make your Raleigh home-buying plans a reality:
Your Credit Score
Your credit score significantly affects your mortgage rate. According to CNET:
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.”
Maintaining a good credit score is crucial, especially with current rates. To improve your score, seek advice from trusted Triangle Area loan officers.
Your Loan Type
There are various types of loans, each with different terms for eligible buyers. The Consumer Financial Protection Bureau (CFPB) states:
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.”
Consult with Linda Craft Team Realtors to explore the available loan options and determine which ones you qualify for.
Your Loan Term
Another key factor is the term of your loan. Freddie Mac explains:
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.”
The length of your loan can influence your mortgage rate, so consider your options carefully.
Bottom Line
While you can’t control broader economic trends, you can control specific factors that impact your mortgage rate. Work with a trusted Raleigh lender like Linda Craft Team Realtors to identify steps you can take to secure a better rate. By being strategic about these controllable factors, you can potentially mitigate the effects of higher mortgage rates and secure the best possible deal for your Triangle Area home purchase.