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Mortgage interest rates met her highest level since 2000 a year ago this week. And they continued to rise until the end of 2023, reaching 8% for 30-year mortgage loans. But as inflation rose from over 9% in June 2022 To now below 3%cuts in the prime rate, and hence mortgage rates, are becoming increasingly likely. But with the average mortgage rate currently at around 6.50% – more than double what it was a few years ago – homebuyers may be looking for ways to get an even lower rate, preferably below 6% if possible.
Fortunately, there are several ways to do this, some of which can be combined into a workable plan. However, buyers will need to do some math and be aggressive in order to get a mortgage rate under 6% now. Below, we’ll explain three steps they should consider taking to do so.
First, look online to see what mortgage interest rate you could secure now.
How to get a mortgage interest rate of less than 6% now
Would you like to secure a mortgage interest rate in the 5% range now? Then you should consider these three steps:
Buy mortgage points
If you have been shopping around for mortgage rates lately, you have probably already found one or two rates under 6%. However, many lenders advertise available rates by Mortgage points in advance. To get this rate below 6%, you have to pay this fee. This can Costs 1% of the total mortgage amountbut could be valuable to a home buyer who wants to secure the lowest possible interest rate now. Simply weigh the potential savings against those that might be available in a few months or a year (approximately) by Refinancing instead.
Learn more about purchasing mortgage points online here.
Consider a variable rate mortgage
If you have a Mortgage with variable interest rate With a 3/1 framework, where the interest rate stays the same for the first three years and then becomes variable and changes once a year after that, you can now lock in a 5.90% interest rate, according to Bankrate. While a variable rate—even one that doesn’t change for years—isn’t necessarily desirable, it could be a smart move in today’s economy.
Not only does this option allow you to lock in a rate below 6% now, but it also expires when interest rates are generally expected to be lower than they are now (if current projections hold true), allowing you to save money now – and again when you refinance in three years at the prevailing, lower rate.
Improve your credit rating
It is important to remember that the lowest interest rates – whether advertised or offered through an online marketplace – are available to borrowers with the cleanest credit profiles and the highest Credit scoresTo significantly improve your chances of getting an interest rate below 6%, you should Improve your credit rating as high as possible. This will take time, but drastic efforts (like paying off high-interest debt) can significantly improve your score, so do as much as you can now, or you’ll have to continue living with an above-average interest rate no matter how far the interest rate climate drops in the coming months.
The conclusion
If you’re looking for a mortgage rate under 6% now, several ways can help you do it. You just need to be strategic about it. That includes buying mortgage points, looking into an adjustable rate mortgage, and improving your credit score — or a combination of those tactics. It also means taking the time to research lenders to find one that currently offers the lowest interest rates and fees. But the mortgage rate climate is changing, and you want to take advantage of it, so start implementing these strategies now to improve your chances of getting a mortgage rate under 6% as quickly as possible.
