3 things homebuyers should do before the Fed's March meeting
The Federal Reserve is set to meet again on March 19 and March 20, and the interest rate decision that comes out of that meeting is sure to reverberate throughout the economy. Even if the Fed keeps the benchmark interest rate unchanged, as many are expecting, it will still be stuck at a 23-year high. That said, a pause in rate hikes will still be better than a rise, particularly for borrowers.
Inflation and higher interest rates have caused the cost of borrowing for mortgages, personal loans and other credit options to surge. Homebuyers, in particular, have been coping with mortgage rates hovering at decade-highs. Ahead of the next Fed meeting, then, buyers may want to take a few steps now to circumvent any additional economic pain to come. Below, we'll break down three things homebuyers should do before the Fed's March meeting.
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3 things homebuyers should do before the Fed's March meeting
Here are three things homebuyers should consider doing before the Fed's March meeting.
Shop for lenders
Just like you wouldn't necessarily buy the first car you test-drove, you shouldn't simply accept the first home loan offer you receive. Instead, shop around for lenders to find one offering the lowest interest rate and best terms. You should be doing this now, before the repercussions of the Fed's March meeting reverberate among the home lending industry.
And remember that even half a percentage point difference between lenders can lead to big savings — both in your monthly payment and what you ultimately pay in interest over the life of the loan. But since mortgage rates change daily, it's beneficial to get started now, before any major changes take place later in the month.
Start shopping for a mortgage lender today.
Understand all options
In today's elevated rate climate, homebuyers should research and understand all the ways that they can potentially secure a below-average rate. This includes purchasing mortgage points to permanently secure a rate below what otherwise would have been possible. But it also means exploring the possibilities an adjustable-rate mortgage can offer right now.
While neither is ideal compared to the fixed, low rates that could have been obtained in recent years, each has unique benefits that could save buyers money. But it's important to understand the pros and cons of both so that you're ready to act promptly when you find a lender.
Lock in a rate
The Federal Reserve doesn't necessarily need to cut rates to influence the mortgage sector. Even a hint at rate cuts to come — or an indicator that rates will remain elevated longer — could affect the mortgage rate climate.
Knowing this, then, buyers should strongly consider locking in a mortgage rate today. By doing so, they ensure that they won't get stuck paying anything higher. And if rates drop before closing they could always unlock their current rate and lock in the new one. Or, they could refinance long-term when the rate environment stabilizes. Waiting for a rate cut that may not even materialize, however, could be risky.
Lock in today's mortgage rate here now.
The bottom line
Today's rate climate is evolving, and while most don't expect a rate cut to come later in March, it's unlikely that rates will be unaffected, either. Understanding this, homebuyers should start shopping for lenders and understanding their mortgage rate options now. From there they should strongly consider locking in today's rates, even if imperfect, to protect against any future volatility. By taking these steps now, buyers will position themselves for greater financial success both during the homebuying process and, later, long-term homeownership.
