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5 ways to prepare for mortgage interest rate cuts now
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Mortgage interest rates are on the decline – and they could fall further in the weeks and months ahead. With the latest inflation report showing the rate dropping again in July (the fourth consecutive month in which it did so) and with it down dramatically from a 40-year high in June 2022, the Federal Reserve is preparing to cut its federal funds rate, which is currently frozen at a range between 5.25% and 5.50%. On August 23, Federal Reserve Chairman Jerome Powell explicitly said that the “time has come” to act. But the time has also come for prospective homebuyers to act, too.
The homebuying process can be a lengthy and complex one, and it’s likely to be complicated by a cooling mortgage interest rate climate. Understanding this, then, buyers should start making some strategic moves now so that they’re better prepared to act when they do ultimately find a home they want to purchase. Below, we’ll detail five ways these buyers can start effectively preparing for mortgage interest rate cuts right now.
Start by seeing how low of a mortgage interest rate you can qualify for here.
5 ways to prepare for mortgage interest rate cuts now
Mortgage interest rates are down, on average, more than a full percentage point from where they were at the end of 2023. But they’re expected to fall further soon, especially if the Fed issues a series of interest rate cuts starting with their next meeting on September 17. Ahead of this action, then, here are five effective ways borrowers can begin preparing for cuts now.
Shop for lenders
While most mortgage lenders will offer approximately the same rate as one another, they won’t be identical. And even a slight difference in rates between lenders can add up to significant savings over the life of the loan. So start shopping for lenders now to determine which one is currently offering the best deal – and which ones just seem like they are. Once you find a lender you feel comfortable with, you can start the process so that you’re one step closer to locking in a mortgage rate once they’re cut.
Start shopping for mortgage lenders online today.
Boost your credit
It’s vital to remember that the best interest rates and terms will be reserved for borrowers with the highest credit scores. Even the average interest rates you see listed on lender websites and online marketplaces are for those buyers with superior credit. If you’re not one of those types of borrowers, start taking steps to boost your credit right now. There are multiple ways to do so, but it will take time for these actions to reflect on your score so it behooves you to act promptly.
Look to alternatives
Don’t get stuck with a traditional 30-year mortgage simply because it’s familiar. In a changing rate climate, you should explore all alternatives. This includes a 15-year mortgage (which comes with higher payments but lower interest rates and a condensed repayment period). But it also extends to adjustable-rate mortgages, the purchase of mortgage points and a combination of these options, depending on what your lender is willing to offer. You may be surprised at how far you can ultimately lower your rate.
Calculate your budget
You may think you can afford to borrow a certain amount of money, but you need to definitively know that you can. So precisely calculate your budget now and utilize both today’s average mortgage interest rates, and those that could be available in the fall, to more accurately gauge costs. And don’t forget to account for taxes, homeowners insurance and, potentially, private mortgage insurance (PMI), if you don’t want to use the traditional 20% down payment.
Get pre-qualified
When you’re prepared to make an offer on a home the seller’s real estate agent will inevitably ask if you’ve been pre-qualified. And, if you haven’t yet, you could lose the home to a buyer who already has been. Don’t take that risk. You can get pre-qualified for a large loan amount from any number of lenders. You don’t even need to use the one that provides the pre-qualification for your ultimate purchase. But you’ll want to show sellers that you’re serious about buying, especially in a market in which many buyers are expected to compete against one another. A pre-qualification, while not perfect, can help you stand out a bit from the competition.
Learn more about getting pre-qualified here now.
The bottom line
Mortgage interest rates are dropping and buyers looking to capitalize should do all they can to ensure their chances of success. While each buyer’s financial situation is different, many would benefit from shopping for lenders, boosting their credit and exploring alternatives to the traditional 30-year mortgage loan now. And, if they calculate their budget today and move toward getting pre-qualified as soon as possible, the edge they can obtain now could be the difference between buying and losing their dream home in today’s evolving mortgage market.
Tupperware and some of its subsidiaries filed for Chapter 11 bankruptcy protection, the once-iconic food container maker said in a statement late Tuesday.
The company has suffered from dwindling sales following a surprise surge during the COVID-19 pandemic, when legions of people stuck at home tried their hands at cooking, which increased demand for Tupperware’s colorful plastic containers with flexible airtight seals.
A post-pandemic rise in costs of raw materials and shipping, along with higher wages, also hurt Tupperware’s bottom line.
Last year, it warned of “substantial doubt” about its ability to keep operating in light of its poor financial position.
“Over the last several years, the Company’s financial position has been severely impacted by the challenging macroeconomic environment,” president and CEO Laurie Ann Goldman said in a statement announcing the bankruptcy filing.
“As a result, we explored numerous strategic options and determined this is the best path forward,” Goldman said.
The company said it would seek court approval for a sale process for the business to protect its brand and “further advance Tupperware’s transformation into a digital-first, technology-led company.”
The Orlando, Florida-based firm said it would also seek approval to continue operating during the bankruptcy proceedings and would continue to pay its employees and suppliers.
“We plan to continue serving our valued customers with the high-quality products they love and trust throughout this process,” Goldman said.
The firm’s shares were trading at $0.5099 Monday, well down from $2.55 in December last year.
Tupperware said it had implemented a strategic plan to modernize its operations and drive efficiencies to ignite growth following the appointment of a new management team last year.
“The Company has made significant progress and intends to continue this important transformation work.”
In its filing with the U.S. Bankruptcy Court for the District of Delaware, Tupperware listed assets of between $500 million and $1 billion and liabilities of between $1 billion and $10 billion.
The filing also said it had between 50,000 and 100,000 creditors.
Tupperware lost popularity with consumers in recent years and an initiative to gain distribution through big-box chain Target failed to reverse its fortunes.
The company’s roots date to 1946, when chemist Earl Tupper “had a spark of inspiration while creating molds at a plastics factory shortly after the Great Depression,” according to Tupperware’s website.
“If he could design an airtight seal for plastic storage containers, like those on a paint can, he could help war-weary families save money on costly food waste.”
Over time, Tupper’s containers became popular that many people referred to any plastic food container as Tupperware. And people even threw “Tupperware parties” in their homes to sell the containers to friends and neighbors.
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