By Mike Lentz | The Mike Lentz Team - Keller Williams Realty
You can’t control the Federal Reserve or inflation, but you can control your mortgage rate in three real ways: your credit score, the loan structure you choose, and the type of home you buy. Buyers across Camden, Burlington, Gloucester, Salem, and Cumberland counties who focus on these often lock in a better rate than the ones waiting on the headlines. A trusted local lender can help you get each one right.
If you’re trying to buy a home, affordability is probably what keeps you up at night. And as you watch mortgage rates tick up again lately, it’s fair to wonder if you should just hit pause and wait for them to go down. Here’s the thing though: you can control your mortgage rate more than you think, and knowing where you have leverage matters right now.
For now, though, they’re headed the other way. Mortgage News Daily data shows how rates have risen this year (see graph below):
And if you’re wondering why? There are actually a number of reasons.
Mortgage rates are impacted by the situation overseas, economic data, inflation numbers, oil prices, and even decisions from the Federal Reserve (who recently decided to hike their Fed Funds Rate, which often affects mortgage rates too). As Danielle Hale, Chief Economist at Realtor.com, explains:
“The pressure on mortgage rates was here even before the Fed rate hike, and it doesn’t show signs of relenting. . .”
Now, that’s probably not what you wanted to hear. But it doesn’t mean there’s nothing you can do. You can’t control where the broader market goes from here, but you absolutely can control your mortgage rate in a few real ways that shape what you actually pay.
So where should you focus? Let’s walk through it.
Three Ways to Control Your Mortgage Rate Right Now
Buyers across Camden, Burlington, Gloucester, Salem, and Cumberland counties are facing the same rate environment. The difference comes down to how you position yourself. Here are three levers worth pulling.
Work on Your Credit Score
Your credit score plays a big role in the rate you qualify for. Even a small improvement can make a real difference in your monthly payment. As Freddie Mac puts it:
“Generally, the higher your credit score the more options will be available to you, including better loan terms and a lower interest rate.“
Do what you can to keep your credit score up. It’s the single fastest way to control your mortgage rate before you apply. If you’re not sure where your score stands right now, or how to improve it, talk to a trusted loan officer. They can walk you through what moves will have the biggest impact before you apply.
Explore Your Loan Options
The type and term of your loan both affect your rate. Conventional, FHA, VA, and USDA loans each come with their own requirements and rates. Your term (15, 20, or 30 years) changes both your payment and the total interest you’ll pay.
The structure matters, too. A fixed-rate loan holds the same rate over time. An adjustable-rate loan usually starts lower and can move later on. Bankrate explains it this way:
“. . . rates on fixed-rate loans are typically higher than introductory rates on adjustable-rate loans because the fixed-rate lender takes on the risk that rates could increase during the loan’s term. Likewise, government-backed FHA, VA and USDA loans sometimes have lower rates because they have a government guarantee or insurance that cuts the lender’s risk.“
The loan you choose is another lever to control your mortgage rate, so it’s worth exploring your options with a lender to see what makes the most sense for you. Just balance your goals, your possible rate, and any tradeoffs before deciding. You may even want to talk to multiple lenders to see how the options vary.
Consider a Newly Built Home to Control Your Mortgage Rate
Another way to control your mortgage rate comes down to the kind of home you buy. Many builders are buying down mortgage rates, which lowers your monthly payment. It’s just one way they’re trying to attract buyers and get their homes sold.
According to Realtor.com, buyers of newly built homes landed a lower average rate last quarter than buyers of existing homes (see graph below):
If a lower rate is your goal, it may be worth asking your agent to show you some new build communities that are offering this type of incentive locally. There are active new construction developments across all five South Jersey counties right now.
The Bottom Line: Control Your Mortgage Rate Where You Can
You can’t control where mortgage rates go. But you can control your mortgage rate at the personal level with your credit, your loan, and the kind of home you buy. Working with a trusted lender can help you lock in the best rate you qualify for. And when you’re ready to make a move that fits your budget, let’s connect.
If you want to talk through what this means for your situation, schedule a quick call and we’ll walk through it together.
For the full picture in your county, see our county market reports for Camden, Burlington, Gloucester, Salem, and Cumberland counties.
