By avoiding certain mortgage rate mistakes now, homebuyers and owners looking to refinance can better improve their chances of success.
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The moment homebuyers and owners looking to refinance their loans finally appeared in September when mortgage interest rates fell to a three-year low.
While they've increased slightly in the time since, last week saw another decline and, overall, rates here are considerably lower than the 7% or so they hovered near for large parts of 2025 and before. And with two more Federal Reserve meetings on the calendar for the final three months of the year and, with them, presumed rate cuts at both, mortgage rates could soon become even more affordable. So there's good news, overall, for buyers and owners to take advantage of right now.
And while the conventional wisdom that says you should boost your credit score (to position yourself for more attractive rate offers), shop around for lenders (to find one that's most affordable) and get pre-approved (to improve your chances of having a bid accepted) still applies, there are other items to consider, too. In particular, it's also critical to avoid some costly mortgage rate mistakes now that rates are cooling again. Below, we'll examine three big ones to avoid in today's climate.
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3 big mortgage rate mistakes to avoid now that rates are cooling again
Buyers and potential refinancers can better exploit this cooling in the mortgage rate climate if they avoid making these three specific errors in today's evolving rate climate:
Thinking that rates can only go down
It may be tempting to wait for mortgage rates to decline even further, potentially below 6%, especially considering that they've been cooling for much of 2025. But that would be a costly mistake worth skipping. Mortgage rates don't decline in a neat, linear way, and this has been demonstrated multiple times just in the last year.
After mortgage rates plunged to a then-two-year low in September 2024, they rose again in the weeks and months after. They also ticked up again over the past few weeks after falling to the three-year low in September (although they fell again last week). So don't get stuck with the assumption that rates can only go down further from here. If you can afford today's rates and have a home you want to buy, it's generally worth doing so. You can always refinance when rates stabilize in the future.
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Dismissing the additional savings alternatives can provide
Don't just look at the rates currently being offered on traditional 30-year fixed-rate mortgage terms, as ubiquitous as those may be currently. You can secure a rate lower than what you see listed online by tacking on mortgage points, which serve as a fee to the lender to lock in a below-average rate. And adjustable-rate mortgages (ARMs) offer homebuyers a wait to lock in a lower rate, perhaps even in the 5% range now, albeit one that's temporary and will need to be adjusted after the initial, introductory rate expires. Either option, however, is worth exploring, especially if you need just a slightly lower rate (think 25 basis points or so) to afford the house you want to buy.
Assuming the 1% mortgage refinancing rule needs to always apply
Traditionally, if a homeowner can secure a new mortgage rate a full percentage point or more lower than their existing one, then it's worth pursuing. But this isn't always the case, and today's mortgage rate climate isn't a traditional one. So don't automatically assume this is applicable to your current situation, as even rates half a percentage point lower than what you're now paying can result in significant savings.
Do the math, then, to determine what you can potentially save by refinancing now. Just make sure that you account for closing costs, too, and you should plan on remaining in the home that you're refinancing long enough to recoup all of these costs, or refinancing may not be valuable, even if it means temporarily lowering your current monthly payments.
The bottom line
Homebuyers and homeowners waited a long time for lower mortgage rates to materialize so they'll want to be judicious in their approach now that they're finally here again. By avoiding these three mistakes they can potentially exploit this moment in time, save more money and reduce their monthly mortgage costs. Just don't make any rash moves, either. It's important to make the right decisions here to ensure affordability both now and, theoretically, over the full life of the mortgage loan in question.
Edited by Angelica Leicht
