How Savvy Homebuyers Are Locking in 5% Mortgage Rates—You Can Too!

With mortgage rates currently sitting in the mid-6 % range, it might seem impossible to snag a rate below 6%. However, with a few smart moves, you can still secure that elusive rate in the 5% range. Here’s how you can do it.

Tip 1: Buy Points to Lower Your Rate

One of the most straightforward ways to reduce your mortgage interest rate is by buying discount points. If you’re unfamiliar with the concept, discount points are essentially prepaid interest. By paying some interest upfront, you can lower your mortgage rate over the life of your loan.

Tip 2: Consider an Adjustable-Rate Mortgage (ARM)

Another way to secure a rate below 6% is to opt for an Adjustable-Rate Mortgage (ARM). ARMs typically offer a lower initial rate than fixed-rate mortgages, making them a great option for those who want a lower rate.

An ARM starts with a fixed rate for an initial period—usually 5, 7, or 10 years—after which the rate adjusts annually based on market conditions. 

However, ARMs come with some risks. After the initial period, your rate could increase if market rates go up. But if you plan to move or refinance before the adjustment period, an ARM could save you a lot of money.

Tip 3:  Explore FHA and VA Loans

If you qualify for a government-backed loan, such as an FHA loan, you could be in a great position to secure a lower interest rate—perhaps not in the 5% range currently, but for those with lower credit scores or smaller down payments, an FHA loan can get much closer to below 6% than a conventional loan.

VA loans are available to veterans, active-duty service members, and certain National Guard and Reserves members. One of the biggest benefits of a VA loan is the potential for lower interest rates with no down payment required. If you’re eligible, a VA loan could be your ticket to a rate below 6%.

Tip 4: Improve Your Credit Score

Your credit score plays a huge role in determining the interest rate you’ll qualify for. The higher your score, the lower your rate. So, if you’re serious about securing a rate below 6%, it’s worth taking steps to boost your credit score.

Improving your credit score might not happen overnight, but even small improvements can make a big difference in the rate you’re offered.

Tip 5: Work with a Local Mortgage Professional

Navigating today’s mortgage market can be tricky, but you don’t have to do it alone. Working with a local mortgage professional can make a world of difference. We have the expertise you need to guide you through the process and can often find you better rates and loan options than you might discover on your own.

A local pro understands the ins and outs of the market in your area and can tailor their advice to your specific needs. Whether you’re considering buying points, exploring an ARM, or looking into FHA and VA loans, a local mortgage pro can help you make the right decisions to secure the best possible rate.

Conclusion

Even with mortgage rates in the mid-6% range, it’s still possible to lock in a rate below 6%. By buying points, considering an ARM, lowering your credit score, exploring FHA and VA loan options, and working with a local mortgage professional, you can put yourself in the best position to secure a lower rate and save money over the life of your loan.

Don’t wait—reach out to a mortgage professional today and take the first step toward securing a better rate!