Mortgage rates have a direct impact on homeownership costs, and with rates rising, many homeowners and prospective buyers are feeling the pressure. But while mortgage rates are largely influenced by economic factors beyond your control, there are several key areas where you can take charge. By focusing on the controllables, you can better manage the financial impact of rising rates. Here’s how to navigate these uncertain waters and make the most of your mortgage situation.
1. Refinance When It Makes Sense
One of the most immediate ways to take control of your mortgage is through refinancing. While rates have risen in recent years, they are still relatively low compared to historical standards. If you are currently in a higher-rate mortgage, refinancing can help you lock in a better deal. However, it’s important to evaluate the costs associated with refinancing, such as closing costs and potential prepayment penalties.
If you’re in an adjustable-rate mortgage (ARM) and fear that rates will rise even more, refinancing into a fixed-rate mortgage could provide stability and peace of mind. Keep in mind that refinancing isn’t always the right choice for everyone—make sure the savings you’ll get from refinancing outweigh the costs over time.
2. Boost Your Credit Score
A higher credit score can have a significant impact on the mortgage rate you’re offered. Lenders view borrowers with better credit as less risky, meaning you could qualify for a lower interest rate. If your credit score is less than stellar, take steps to improve it before applying for a mortgage or refinancing. This could include paying down credit card debt, settling any outstanding collections, and checking your credit report for errors. A higher score doesn’t just help with mortgage rates—it can also improve your chances of securing better terms on a variety of financial products.
3. Shop Around for the Best Rate
All lenders don’t offer the same rates, and mortgage rates can…