Your Home Sold Guaranteed Realty — The Nathan Clark Team

How to Lower Mortgage Interest Rates – 9 Realtor Strategies

Learn How to Lower Mortgage Interest Rates 

Wondering how to lower mortgage interest rates? As of late 2022, interest rates had risen to 7.2%, with experts predicting that they may continue to rise into 2023. These rising interest rates have many prospective home buyers and current homeowners wondering what they can do to avoid paying more on their mortgages.

In this post, our team at Your Home Sold Guaranteed Realty – The Nathan Clark Team will list nine strategies for lowering mortgage interest rates. We’ll also discuss how our real estate team can help you buy a home in New England and connect you to one of our recommended lenders.

1. Visit Multiple Lenders

First, the easiest way to get lower interest rates on your home loan is by visiting multiple lenders to compare rates. Different types of lenders offer their own loan products. Depending on your financial situation, you may qualify for different rates under each one. 

For this reason, it can be a good idea to take the time to visit credit unions, national banks, local banks, and online banks in your area to see what their rates are. You can also consider hiring a mortgage broker to help you compare your options.

2. Improve Your Financial Situation

If you’re wondering how to lower mortgage interest rates, you’ve probably heard that you’ll need to have a good credit score. A good credit score can go a long way toward getting you a home loan with a lower rate. 

Simple acts like paying down your credit balance, making payments on time, and not taking out new lines of credit right before your mortgage can improve your chances of getting a more favorable rate from lenders.

Another factor lenders look at is the stability of your income. Lenders like to see that you’ve had the same job for years and can prove your income remains steady or is growing. They generally don’t want to see that you’ve changed employment multiple times or quit right before applying for a mortgage.

3. Look at Adjustable Rates vs. Fixed Rates

Generally, when interest rates are high, adjustable mortgages are a better option because they have lower interest rates that are fixed for an initial period. The length of this fixed period can range anywhere from six months to ten years, so be sure to ask your lender what they’re offering.

If you can pay your mortgage off during this initial fixed period, it will likely help you avoid higher rates. However, once the initial period ends, you’ll have to pay whatever the current rate is. And if rates have risen even higher during the time you were in the fixed period, it can end up costing you more money.

This is why a fixed-rate mortgage may be better in the long run because it gives you the option to lock in whatever the interest rate is when you sign up.

4. Purchase Mortgage Points

At the closing table, home buyers have the option to purchase mortgage points. These points are essentially a fee to lower your mortgage rates. One point is equivalent to one percent of the loan’s value, and for every point you buy, it lowers your interest rate by a certain percentage. 

If you have the ability to afford points, it can save you money in the long run. This is particularly the case if you plan on staying in the home long enough to recoup the cost of the points.

5. Consider a Short-Term Loan

Another option for avoiding high interest rates is taking out a shorter-term loan. Shorter-term loans are less risky for the lender, so they come with lower interest rates. However, the tradeoff is that you’ll be making higher monthly payments. 

6. Lock in Your Rate

Prospective home buyers should consider asking their lenders about locking in their interest rate. This is a good move if you expect interest rates to go up, though it can also end up hurting you if rates end up going back down.

To lock your rates, you’ll likely have to pay your lender a fee. It’s also possible to negotiate a rate lock that allows you to take advantage of lower interest rates.

7. Put a Larger Amount Down

If you’re wondering how to lower mortgage interest rates, one of the more obvious ways is making a larger down payment. Since interest rates are calculated based on the principal amount, you’ll end up paying a lower rate overall. 

While this means you’ll be paying more upfront, it can potentially save you more money in the long run.

8. Sign Up For Automatic Payments

Another way to make yourself more favorable to lenders is by signing up for automatic monthly mortgage payments. Depending on the lender, they may offer a lower interest rate as an incentive to sign up for automatic payments. 

In addition, it increases the lender’s confidence in the stability of your income and ability to make timely, regular payments. 

9. Refinance Your Existing Mortgage

For current homeowners, refinancing is one of the most common ways to lower mortgage rates.  If you currently have a fixed-rate mortgage, consider refinancing to an adjustable-rate mortgage or vice versa. You can also refinance to the same type of mortgage, just with more favorable terms.

Or, if your credit score and income have improved since you first took out your mortgage, you can try asking your lender for a lower rate on the basis of increased financial stability.

Learn How to Lower Mortgage Interest Rates With Our Team

Despite rising interest rates, there are certain steps you can take to lower your mortgage rate as much as possible. This all starts by working with a professional realtor in your area. An experienced realtor can connect you to the best lenders, so you can find the right mortgage for your financial situation.

If you’re looking to buy a home in New England, then our real estate team at Your Home Sold Guaranteed Realty – The Nathan Clark Team can help you.

We’ve been serving home buyers in Rhode Island, Connecticut, and Massachusetts for years. This has allowed us to form a network of professional lenders that we recommend all our clients to partner with.

On top of our experience and connections, we also offer unique buyer’s guarantees. These guarantees make the home buying process as smooth and stress-free as possible, such as our Buyer Protection Plan and Buyer Cancellation Guarantee.

To learn more about our guarantees or how to lower mortgage interest rates, give us a call at 401-288-3557 or fill out the form below.

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