3 ways to get a lower mortgage rate before the Fed's April meeting
So much for a June interest rate cut. While many were cautiously optimistic at the start of the year that inflation would continue to fall and interest rate cuts would soon follow, the recent trio of inflation reports have significantly reduced those hopes. And with inflation rising both in February and March, the prospect of rate increases is suddenly more realistic. At a minimum, one Fed official recently floated the idea of no rate cuts at all in 2024 — and that was before the most recent inflation report release.
Against this backdrop, homebuyers need to be savvy in their approach. Mortgage interest rates hit their highest point since 2000 last summer and hovered around that point ever since. And there's still much work to be done to temper current rate volatility. That all noted, while current buyers won't be able to secure the low rates of 2020 and 2021, they may still be able to a lower mortgage rate right now, before the Fed's April meeting potentially affects the cost of home borrowing again.
See what mortgage rate you could qualify for today here.
3 ways to get a lower mortgage rate before the Fed's April meeting
Here are three effective ways to get a lower mortgage rate now, before the market potentially heats up at the end of the month.
Lock in a rate now
Sure, today's 7.13% average rate for a 30-year mortgage seems high, particularly compared to the 3% range available in recent years, but it may be the lower option if you wait around and rates rise again. There's no real downside to locking in today's rate now.
If rates somehow drop between the time you lock your rate and the time you close, you could unlock and relock the new one (assuming you've kept your credit in shape in the interim). And if rates are higher by that time, you'll already have the better option. Plus you could always refinance at some point in the future when the rate climate stabilizes.
See exactly how low of a mortgage rate you could secure online today.
Explore all alternatives
Lenders will provide other ways to get a lower interest rate besides the conventional mortgage loan. By buying mortgage points, borrowers will pay a fee to the lender in exchange for getting a lower rate (think half a percentage point, approximately). This fee can be paid upfront at closing or rolled into the overall mortgage loan, but it could add up to major savings over the life of the loan.
Adjustable-rate mortgages, meanwhile, will adjust over time (usually after the first few years of the mortgage loan). But buyers may be able to get a lower rate than they would have if they had gone the conventional route. And they could always refinance into a fixed-rate loan when the market changes again.
While neither option is perfect (mortgage points will cost you and adjustable-rate mortgages come with inherent risks if the market doesn't move in the right direction), they're both viable for buyers looking to secure a lower mortgage rate immediately.
Shop around
While you won't likely find a mortgage rate dramatically lower from one lender to another, every little bit helps. And with mortgage applications currently down, lenders will look to compete with one another right now to secure your business.
Knowing this, then, buyers should shop around to find the lowest rate possible. But don't just compare the rate — compare the estimated closing costs and fees as well. After all, a lower mortgage rate that comes with excessive fees may not be as advantageous as it seems on paper.
Learn more about your mortgage options online today.
The bottom line
With another Federal Reserve meeting just weeks away — and the potential for rate hikes higher than they've been in months — homebuyers should consider taking certain steps now to get a lower mortgage rate. That means locking in what's available now before they potentially tick up. But it also means exploring alternatives like mortgage points and adjustable-rate mortgages. And, as is the case with most financial products, it pays to shop around to find the best rate and terms. By taking these steps now, before the market adjusts to whatever decision the Fed makes at the end of April, you can better position yourself for homebuying success.
