What homebuyers must do now that rates are cut
The day homebuyers were eagerly waiting for finally came this week when the Federal Reserve announced its first interest rate cut in more than four years. Now at a range between 4.75% and 5%, the benchmark rate is half a point lower than it was for more than a year.
And mortgage lenders have already started reacting, with mortgage rates on a 30-year loan hitting their lowest point in two years earlier on Wednesday. Rates could also fall in the months ahead as additional reductions look possible for when the Fed meets again in November and December.
While this is great news for homebuyers, it also means that it's time to get to work. With cooler rates within reach, there are some important next steps homebuyers must take now to ensure they secure the best rates and terms available. Below, we'll break down three of them.
Start by seeing how low a mortgage rate you could lock in here now.
What homebuyers must do now that rates are cut
Lower interest rates could be a great motivator to buy a home. But don't forget these equally important items, too:
Check their credit score and report
While you may have already been seeing lower mortgage interest rates listed on lender websites and online marketplaces before the rate cut – and may seen even lower ones listed now – it's important to remember that those are the offers for borrowers with the cleanest credit histories and highest credit scores. So, if you don't have both, don't expect to get what's listed.
Instead, check your credit score now and review your report to make sure it accurately reflects your financial health. And take as many steps as possible to boost your credit score as quickly as you can. Waiting to do so could result in you dealing with increased homebuyer competition and higher home prices as this week's rate cuts reverberate throughout the market.
Learn more about your current mortgage rate options here.
Contact a real estate agent
An experienced and informed real estate agent can provide a vital service in any market, but particularly now as many expect additional buyers and sellers to take action. While you may be able to successfully navigate today's changing market on your own, you can make it easier and less stressful with the right agent. Not only can they help you purchase a home at a cost-effective price and with reasonable terms, they can also assist you in selling the property you already have at the same time. And their costs could wind up being negligible, especially when compared to the rising home prices many buyers are already coping with.
Start shopping for lenders
It can be tempting to take the first low mortgage interest rate you're offered now after waiting so long for some relief. But that would be a mistake. Instead, follow the traditional advice and continue shopping for lenders. Get offers from at least three to see who is truly offering the best rates and terms – and which one just seems like they are. But don't just look at the rate when shopping around. Look at the fine print, too, for things like mortgage points and any incorporated fees and penalties. This will allow you to complete an accurate comparison between lenders.
Start shopping for mortgages here now.
The bottom line
Now, and the weeks and months ahead, could be an exciting time for homebuyers. But don't let lower interest rates cloud your better judgement. It's still beneficial to take a strategic and nuanced approach to homebuying. So review your credit score and improve it where possible. Also consider the advantages of working with a real estate agent and, as usual, shop around for lenders to improve your chances of securing the best deal. These moves will better position you for homebuying success both now and over the lifespan of your future mortgage.
