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6 creative ways to find a lower mortgage rate this summer, according to experts
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Inflation has been stubbornly high, hovering at over 3% throughout the first half of 2024. As a result, the Federal Reserve has been forced to keep interest rates higher for longer, hoping to quell spending and send inflation down with it. Unfortunately, that has also meant higher mortgage rates. Right now, the average 30-year mortgage loan rate sits at just above 7% — nearly 2% higher than it was just two years ago.
But while the high mortgage rates we’re facing now may give homebuyers pause, it’s important to consider the potential benefits of buying sooner rather than later. By acting now, you can start building equity and take advantage of rising home values. It could also help you avoid higher home prices down the line (if rates do drop, it could lead to increased competition, which would drive up prices.)
And, fortunately, waiting it out isn’t your only option if high mortgage rates are a concern.
Find out how much you could save with the right mortgage loan now.
6 creative ways to find a lower mortgage rate this summer, according to experts
Here are a few creative ways experts say you can get a lower mortgage rate today.
Buy mortgage points
The first thing you can do is buy points. These are sometimes called “mortgage points” or “discount points,” but the idea is the same: You pay an upfront fee (essentially prepaying interest), and in exchange, the lender gives you a lower interest rate for the life of the loan.
Traditionally, you’ll pay 1% of the loan amount for a 0.25 reduction in your interest rate, though the exact cost and rate reduction varies depending on the lender and market conditions.
“In the current market, you are seeing a spread in some circumstances of close to 0.75% to a full percent in interest rate differential,” says Matt Ricci, a home loan specialist at Churchill Mortgage. “This is an anomaly that exists in rapidly increasing rate environments and is not one that should be ignored — nor is one that we have seen in many years.”
If you do choose to buy points, calculate your breakeven point before pulling the trigger. This is the month in which the savings the points net you — that saved interest — outweighs the cost of the points. For example, if the points cost you $5,000, and they save you $125 per month, it would take you 40 months to break even on your costs.
“Paying points only makes sense if you feel you will hold on to the loan long enough to recoup the cost,” says Suzanne Downs, co-owner of Palm Beach Mortgage Group.
Explore your top mortgage loan options and compare lenders today.
Ask for a rate buydown
You can also explore rate buydowns. These are a similar strategy to points, except someone else pays for them — usually the seller, builder or in some cases, the lender.
Buydowns can offer permanent rate reductions, as with points, but more commonly, they’re temporary, offering a lower rate for the first few years of the loan. In a 2-1 buydown, for instance, you’d get a 2% lower interest rate in the first year and a 1% lower interest rate in the second. The loan would revert to your originally quoted rate in Year 3.
According to David Kakish, branch manager and home loan expert at Anchor Home Loans, temporary buydowns can be a smart option right now, as the Fed is largely expected to cut interest rates in the near future.
“It creates a window to wait for rates to decrease naturally,” Kakish says.
Then, once your buydown expires and rates have fallen, you can refinance to take advantage of lower rates more permanently.
Find the right lender
Shopping around for your lender can help lower your rate, too, as every company approaches risk, pricing, and eligibility differently. In fact, according to Freddie Mac, you can save about $1,200 per year just by getting at least four loan quotes.
When you get quotes, “Make sure you are comparing apples to apples,” says Michelle White, national mortgage expert at The CE Shop. “The loan terms, fees, closing costs, and APRs should be the same.”
You can also negotiate with the lenders you’re working with.
“Many banks are offering deals and discounts to remain competitive. Asking your lender if they can match or beat competing offers is a great way to get a lower rate without the hassle of starting the loan process over again,” Brian Shahwan, a vice president and mortgage banker at William Raveis Mortgage, says.
Improve your credit score
Another smart way to reduce your rate is to increase your credit score before applying for your loan. According to ICE Mortgage Technology, the average 30-year conventional mortgage rate for someone with an 800 or higher credit score was 6.96% over the last month. For borrowers in the 640 to 659 range, it was 7.55%.
“Lenders price rates based on credit score bands — 740 to 759, 760 to 779, 780-plus,” Kakish says. “Moving from a 779 to a 780 could save you 0.125% to 0.25% on your rate, which can amount to $30,000 or more in savings over the life of the loan.”
To improve your score, work on reducing your debts and make sure you’re paying your bills on time. You can also dispute errors you find on your credit card and avoid opening any new accounts.
Use a mortgage broker
You might also consider using a mortgage broker. Unlike loan officers, who are employed directly by a single lender, mortgage brokers work with dozens of companies. They can help you pinpoint the best lender and loan program for your needs and budget, and they can assist with filing your application and comparing quotes.
“Mortgage brokers typically have relationships with several banks — even some borrowers may not have heard of before,” Shahwan says. “The broker will then be able to shop the lowest rates and best incentives across all lenders.”
Brokers are usually paid a commission by the lender you end up going with — typically a small percentage of the loan amount. You won’t need to pay them directly.
Ask this question
Finally, make sure to ask any lender you consider if they offer “float-downs.” A float-down lets you take advantage of lower rates after you’ve locked your mortgage rate.
For instance, if you locked your rate at 7%, but market rates drop to 6.5% before you can close on your loan, a float-down would let you drop your rate to 6.5%. Some lenders will do this for free, while others charge a fee.
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Americans are increasingly skeptical about the value and cost of college, with most saying they feel the U.S. higher education system is headed in the “wrong direction,” according to a new poll.
Overall, only 36% of adults say they have a “great deal” or “quite a lot” of confidence in higher education, according to the report released Monday by Gallup and the Lumina Foundation. That confidence level has declined steadily from 57% in 2015.
Some of the same opinions have been reflected in declining enrollment as colleges contend with the effects of the student debt crisis, concerns about the high cost of tuition and political debates over how they teach about race and other topics.
Whether a college educations is required to achieve professional success is also up for debate, as only about 1 in 4 Americans say a bachelor’s degree is necessary to secure a well-paying job, according to a March survey from the Pew Research Center.
Employment opportunities and earnings for young men without college degrees have improved in the last decade, reversing some of the economic damage that eroded the group’s fortunes starting in the 1970s. Young men with only a high school degree have seen a slight rebound in their earnings since 2014, Pew found.
The median annual income for men 25- to 34-years-old without a college degree was $45,000 in 2023, a 15% increase from $39,300 in 2014 when adjusted for inflation, according to Pew’s analysis of Census data.
Dimming belief in college
But the dimming view of whether college is worth the time and money extends across all demographics, including gender, age and political affiliation. Among Republicans, the number of respondents with high confidence in higher education has dropped 36 percentage points over the last decade — far more than it dropped for Democrats or independents.
“It’s so expensive, and I don’t think colleges are teaching people what they need to get a job,” said Randy Hill, 59, a registered Republican in Connecticut and a driver for a car service. His nephew plans to do a welding apprenticeship after graduating high school. “You graduate out of college, you’re up to eyeballs in debt, you can’t get a job, then you can’t pay it off. What’s the point?”
The Gallup-Lumina survey’s overall finding — that 36% of adults have strong confidence in higher education — is unchanged from the year before. But what concerns researchers is shifting opinion on the bottom end, with fewer Americans saying they have “some” confidence and more reporting “very little” and “none.” This year’s findings show almost as many people have little or no confidence, 32%, as those with high confidence.
Tuition too high
“The No. 1 deterrent for a student not to pursue a college degree is affordability — they simply think they can’t afford the cost of a higher education,” Michael Itzkowitz, founder of HEA Group, a research and consulting firm focused on college, told CBS MoneyWatch in May.
The schools with the best return on investment for low- and middle-income students include many of California’s state colleges, which tend to be lower-priced than nonprofit private universities, he noted.
Experts say that fewer college graduates could worsen labor shortages in fields from health care to information technology. For those who forgo college, it often means lower lifetime earnings — 75% less compared with those who get bachelor’s degrees, according to Georgetown University’s Center on Education and the Workforce. And during an economic downturn, those without degrees are more likely to lose jobs.
“It is sad to see that confidence hasn’t grown at all,” said Courtney Brown, vice president at Lumina, an education nonprofit focused on increasing the numbers of students who seek education beyond high school. “What’s shocking to me is that the people who have low or no confidence is actually increasing.”
This year’s survey added new, detailed questions in an effort to understand why confidence is shrinking.
Almost one-third of respondents say college is “too expensive,” while 24% feel students are not being properly educated or taught what they need to succeed.
The survey did not specifically touch on the protests this year against the war in Gaza that divided many college campuses, but political views weighed heavily on the findings. Respondents voiced concerns about indoctrination, political bias and that colleges today are too liberal. Among the respondents who lack confidence, 41% cite political agendas as a reason.
Generally when people express confidence in higher education, they are thinking of four-year institutions, according to Gallup. But the survey found that more people have confidence in two-year institutions. Forty-nine percent of adults say they have “a great deal” or “quite a lot” of confidence in two-year programs, compared with 33% of Americans who feel that way about four-year colleges.
California college student Kristen Freeman understands why.
“It’s about saving money. That’s why I went to a two-year. It’s more bang for your buck,” said Freeman, 22, a sociology major at Diablo Valley Community College with plans to transfer to San Jose State University for the final two years of college.
Freeman understands the concerns about indoctrination and whether college prepares students for life and work but also feels the only way to change structural problems is from the inside. “I am learning about the world around me and developing useful skills in critical thinking,” Freeman said. “I think higher education can give students the spark to want to change the system.”
The Republican National Committee’s 2024 platform, approved by its platform committee and released Monday, is influenced heavily by presumptive presidential nominee and former President Donald Trump, and in a change from prior years, it backs the rights of states to make their own abortion laws.
The 2016 RNC platform mentioned the word “abortion” 35 times and backed a constitutional amendment to ban abortion: “[W]e assert the sanctity of human life and affirm that the unborn child has a fundamental right to life which cannot be infringed,” the RNC’s 2016 platform said. “We support a human life amendment to the Constitution and legislation to make clear that the Fourteenth Amendment’s protections apply to children before birth.”
The Republican Party did not release a platform in 2020. And the 2024 platform only mentions the word once.
“We proudly stand for families and life,” the 2024 platform says. “We believe that the 14th Amendment to the Constitution of the United States guarantees that no person can be denied life or liberty without due process,” but it goes on to say, “the states are, therefore, free to pass laws protecting those rights.”
The platform has been initially approved by the RNC committee, but is expected to go to a full vote Tuesday and be officially approved the first day of the Republican National Convention next week.
It also goes on to express opposition to late-term abortion and support for “policies that advance prenatal care, access to birth control, and IVF (fertility treatments).”
Ralph Reed, founder and chairman of the Faith and Freedom coalition, previously expressed concerns about removing abortion language, but he appeared to fall in line and back the GOP platform as released.
“The Republican Party platform makes clear the unborn child has a right to life that is protected by the Constitution under the due process clause of the 14th Amendment,” Reed said in a statement. “That language has been in the GOP platform for 40 years and reflects the view of Ronald Reagan. While aspirational, it applies to both the states and the federal government. The proposed ban on late-term abortion also implies federal as well as state action. It is an unapologetically pro-life position, and we are grateful to President Trump and the Republican Party for standing for life.”
RNC Chairman Michael Whatley and Co-chair Lara Trump focused on the economy and the border in their statement on the platform.
“Only President Trump can restore our economy, restore our southern border, and restore America’s standing in the world,” the two RNC leaders said in a joint statement. “His 2024 Republican Party Platform is a bold roadmap that will undo the devastating damage that Joe Biden’s far-left policies have done to this country, power President Trump to a historic victory in November, and Make America Great Again.”
The platform is titled, “2024 GOP Platform: Make America Great Again!” It bears clear signs of the former president’s influence, emphasizing enforcing border security and stopping the “migrant crime epidemic.” The platform includes a goal to carry out “the largest deportation operation in American history.”
The platform also proposes building a “great iron dome missile defense shield over our entire country.”
Trump and his campaign have also adopted a new proposal in recent months — eliminating taxes on tips. Trump mentions it frequently at rallies, and it appears in the RNC 2024 platform, along with a promise to end inflation, which has been easing.
The GOP also states in the platform that there will be no cuts to Social Security or Medicare and no changes to the retirement age. It also says that the push for electric vehicles should be canceled and regulations should be cut. And it calls for “same day voting, voter identification, paper ballots, and proof of citizenship” as means to “secure our elections.”