Mortgage interest rates are declining again, new data shows.
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Here's something you may not have read in a while: Mortgage interest rates just dropped. And it wasn't just an anomaly. In fact, mortgage rates have declined for five consecutive weeks now, according to FreddieMac data released Thursday. Now at an average 6.67% rate on a 30-year mortgage, rates are down by more than 20 basis points from where they sat at the end of May. And, more importantly, they could continue to decline in the weeks and months still to come.
While most experts don't expect the Federal Reserve to cut the federal funds rate when the central bank meets again at the end of July, those expectations reverse course for the Fed's following meeting in September. There's around a 70% chance rates will be reduced then, according to the CME Group's FedWatch tool. Though rates are impacted by more than just the Fed's actions (or lack thereof), mortgage rates did plunge to a two-year low last September when the Fed cut its benchmark rate by a larger-than-anticipated 50 basis point cut. So, a lower federal funds rate will typically help homebuyers. And that help could arrive sooner than expected, as lenders don't necessarily need to wait for Fed actions to cut their offers to homebuyers.
Against this backdrop, then, and with the possibility of new buyers flooding the market later this year if rates continue to drop, current homebuyers may want to prepare accordingly. Below, we'll break down three steps they should take right now.
Start by seeing how low a mortgage rate you'd currently qualify for here.
What homebuyers should do with mortgage rates dropping again
While the to-do list for homebuyers may start to lengthen as mortgage interest rates decline, many would benefit from checking off the following items immediately:
Check their credit report
Today's average mortgage interest rate of 6.67% is just that – the average. That means that you may be eligible for an even lower rate, depending on your credit score and profile. But you won't know how you appear to lenders before checking your credit report. So, start here by requesting a copy of it. Make sure that it accurately reflects your current credit health and that it doesn't have any inaccuracies (and dispute those if it does). But don't forget the real point of checking your credit report, too and that's to get an idea of where you can improve your score and, thus, your appeal as a buyer. It takes time to improve your credit score from fair to good, so consider checking your credit report sooner than later.
Compare your current mortgage rate options online today.
Research real estate agents
An experienced real estate agent well-versed in the types of homes you want to purchase in the neighborhood you want to purchase it in can be invaluable, particularly in today's unique climate in which rates are coming down but home prices remain high in many parts of the country. Consider, then, researching real estate agents to find one you trust to represent you in any potential transaction. The right agent can be the difference between finding the home of your dreams and just finding a home. So take the time to research potential agents. Speak to friends and family, too, to see if they have any agents they recommend.
Get pre-approved for a mortgage
Let's say your credit report (and score) is in top shape and that you already have a real estate agent on call ready to show you the latest listings that appeared online. Then you should be ready to make an offer, right? Not necessarily. To help you stand out from a crowd of buyers you'll want to get pre-approved for a mortgage loan. This will show sellers that you're serious about any offers you submit and, more importantly, that you have the financial wherewithal to support those offers if they're ultimately accepted. And pre-approval doesn't need to take long as many lenders offer this service free of charge on their website.
Get started with a mortgage pre-approval online today.
The bottom line
A decline in mortgage rates can be exciting, especially considering that they've been falling consistently over the past month and in the context of decades-high mortgage rates in recent years. So you'll want to position yourself to be able to exploit this timely advantage as much as possible. By taking the above steps right now you may not push yourself to the top of the list of buyers but you'll be close. And that's all you may need to have an offer accepted on the home of your dreams.
Matt Richardson is the senior managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
