How to get the best mortgage interest rate as they continue to increase (2024)

The average 30-year mortgage interest rate recently hit nearly 8% according to the St. Louis Federal Reserve Bank, after hovering around 3% just in 2021. Mortgage News Daily, which records rate changes every day, echoes this data and reported an average rate of 8.03% on Oct. 19, 2023. In other words, borrowing money for a home purchase continues to become even more expensive.

While interest charges are an inevitable part of any form of credit or loan — including credit cards, personal loans and car loans — there are still a few steps you can take to make sure you're getting the lowest rate available and saving as much money as possible.

• Improve your credit score
• Shop around for the best rate in your area
• Consider a shorter loan term
• Bottom line

When applying for any new line of credit with alower credit score, you're likely going to receive a higher interest rate, which will make it more costly for you to borrow money. The same idea also rings true when it comes to applying for mortgages.

Remember that your credit score can provide lenders with clues as to how likely you are to repay borrowed money on time and in full — that's why lenders see individuals with lower credit scores as being riskier borrowers and offer interest rates that are toward the higher end of the lender's range.

Conversely, when you apply for a home loan with a higher credit score, you'll be seen as a less risky borrower who is likely to repay the loan amount on time and in full. Lenders will then feel more comfortable offering alower interest rate and it'll be cheaper for you to borrow the money.

Paying your bills on time is themost important thing you can do to help raise your credit score. You should also try to keep your debt balance low and check your credit report regularly so you can dispute any potential inaccuracies that might be bringing your score down — credit monitoring services like Experian and IdentityForce® can help with this.

Mortgage interest rates can fluctuate depending on the market and national rates can provide a good ballpark estimate as to where your rate might lie. Keep in mind that the rate you're likely to receive will depend more heavily on factors such as your specific location,credit scoreandcredit report. While you can take a look at each lender's website to get an idea of what interest rates they charge, the best way to get a solid idea of whatyou'll have to pay is to provide the necessary information and check your rate.

That said, it's important to submit your information and check your rate with more than one lender so you can have a better chance at securing the lowest rate possible. Don't worry about your credit score getting dinged multiple times — when you apply for a mortgage, you can submit your information for a hard inquiry as often as you need to within a 45-day window without your credit score suffering for it.

While you may not always get a drastically low rate between lenders, even a small distinction can make a big difference in how much you end up owing in interest each month.

15-year terms and 30-year terms are common for mortgage loans, meaning you'd have 15 years and 30 years, respectively, to repay the money you borrowed to buy your house. A 30-year loan typically gives you a longer time horizon to make payments, along with smaller monthly payments. Note that shorter loan terms typically carry slightly lower interest rates since you are agreeing to repay the loan over a shorter period of time.

Rocket Mortgage offers home loans with terms as short as eight years and as long as 29 years —this lender also offers Federal Housing Administration, or FHA loans, with down payments as low as 3.5%.

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