1. Check Your Credit Score and Improve It If Needed

Lenders heavily weigh your credit score when determining your interest rate. Higher scores often translate to lower rates. Check your credit report for accuracy, resolve any errors, and pay down high credit card balances to improve your score.

Freeze Your Credit! If you don’t know how, check out these instructions.

2. Shop Around with Multiple Lenders

Mortgage rates vary across lenders. Getting quotes from at least three lenders, including banks, credit unions, and online lenders, allows you to compare rates and terms. Each lender may assess your profile differently, potentially offering a better rate or more favorable terms.

3. Make a Larger Down Payment

Putting down a larger amount reduces the lender’s risk, which may lead to a better rate. While the minimum is often 3-5%, putting down 20% or more can significantly lower your interest rate and avoid private mortgage insurance (PMI) on conventional loans.

4. Choose a Shorter Loan Term

Shorter-term loans, such as 15 or 20 years, usually have lower interest rates than 30-year loans. While the monthly payment will be higher, a shorter term can lead to considerable savings in interest over the life of the loan.

5. Buy Discount Points

Discount points allow you to “buy down” your interest rate by paying extra upfront at closing. Typically, one point costs 1% of your loan amount and can reduce your rate by around 0.25%. This strategy is especially helpful if you plan to stay in the home long enough to recoup the upfront cost through monthly savings.

6. Lock In Your Rate

Interest rates can fluctuate based on market conditions, so once you’ve found a favorable rate, consider locking it in. Most rate locks are 30 to 60 days, allowing you to keep the rate steady while you complete the mortgage process. Ask your lender about rate lock options to avoid surprises before closing.

7. Consider a Different Loan Type

Different types of loans come with different rates. Conventional loans often require higher credit scores, while FHA or VA loans might offer competitive rates to those who qualify, even with lower scores. Physician loans may also provide better terms for qualifying professionals. Explore your loan options with your lender to determine the best fit.

8. Watch Market Trends

Mortgage rates are affected by economic factors like inflation, employment rates, and the Federal Reserve's actions. Staying informed on market trends can help you time your purchase for the most favorable rates. However, remember that personal timing is also essential, so balance market conditions with your financial readiness.