Buying a home in 2023? Here’s what to expect from mortgage rates

With today’s mortgage rates Average APR is between 6% and 7% As of July 2023, prospective homebuyers are paying much more over the life of their loans than borrowers were just a few years ago. In fact, combined with high interest rates Low housing inventory Buying a home in 2023 could turn into an uphill battle.

But if you’re looking for a new home today, you can help yourself by familiarizing yourself with market conditions and what you can do to ensure your score. The best possible mortgage rate Knowing what to expect from rate fluctuations over the next few months, as well as how you can improve your personal loan application, can help you save money in the long run.

Get started by comparing today’s top mortgage rates here.

What to Expect from Mortgage Rates in 2023

It’s difficult to make any predictions for how mortgage rates will move, “because there are so many economic, political and social factors contributing,” said Denver-based real estate expert Deviri Vallejo.

While it’s impossible to predict the future, buyers looking to lock in a rate in 2023 can benefit from knowing what factors could affect rates over the next few months.

recent Market research report from Freddie Mac Rising mortgage rates are attributed to many factors. “This upward trend is being driven by a resilient economy, persistent inflation and more dovishness from the Federal Reserve,” the report said.

Although the Fed currently has Suspended interest rate hikesIt is the rate signal Can go up again Before the end of the year, that could also cause mortgage interest rates to rise. However, there may be some relief for borrowers if inflation is on the downside. Reaching a lower level of inflation can put an end to rising rates — even if they stay high for a while.

And Experts we spoke to recently Say the Fed’s actions, and the way markets respond to them, can affect mortgage rates Start going down If not this year then early next year. “I personally expect them to remain stable or decrease a little towards the end of the year,” Vallejo said.

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How to get a better mortgage rate today

When it comes to financing a mortgage this year, Vallejo said potential buyers should “do due diligence and find the best rate.”

First, focus on the factors you can control. Generally, applicants with the best credit Qualify for the best interest rates. Before you apply for a mortgage, Check your credit score and credit report. Then, start developing habits that can help improve your credit history: Pay your bills on time and in full, reduce your debt, and don’t apply for a new loan or line of credit too close to your mortgage application.

It also pays Compare multiple lenders Before you set a rate. Using the same loan details and application information, compare pre-approval offers from multiple lenders to narrow down the best rates you can qualify for.

Don’t forget that your mortgage loan rate isn’t the only determining factor in your home buying journey. While it can pay to get the best possible rate, there are plenty of other factors to consider before locking in your loan. Also, there is always the possibility of refinancing if rates are lower in the future.

“I can’t reiterate enough that someone should buy a home based solely on their personal financial readiness and not based on where economists predict interest rates will go,” said Colin Gee, CFP, founder of Gee Investments. “Yes, financing a home is more expensive today than it was a year ago, but that’s just one factor to consider in the home buying process.”

Bottom line

If you’re in the market to buy a home in 2023, be prepared to do some research and be patient during your search. Although mortgage rates may rise slightly, they may decline in the coming months if the Fed ends its rate hike cycle, among other factors. But you can take steps to ensure you get the best possible rate in any market by improving your credit and overall application, arming yourself with market knowledge, and comparing different offers from lenders before locking in a rate.

Get started today by comparing the best mortgage rates available now.