4 rate-lowering strategies to share with buyer clients
For some buyers, even a small mortgage rate reduction can make the math work on a home purchase. Here’s how agents can help them move forward.
Elevated mortgage rates remain a major stumbling block for many homebuyers, but real estate professionals can help their clients by educating them about their options — some of which can make a meaningful difference in a borrower's monthly payment.
Why agents should pay attention: When buyers have financing questions, they're most likely to turn to their agents for answers, according to a Zillow study. Helping a buyer secure an affordable loan may be what some clients need to move forward with a home purchase.
It pays to shop around: Danielle Hale, Realtor.com chief economist, identified four ways for buyers to land a lower mortgage rate. The most effective option, by far, was simply taking the time to shop around — something most prospective buyers aren't doing.
But it can put a big dent in their payment: On average, buyers who did shop around for the best rate were able to get a mortgage that was 0.86 percentage points lower, which is significant with rates currently hovering around 7%.
"It does require some effort, but it's worth it," Hale said during a panel at NAR's legislative meetings on June 3.
Every little bit helps: The three other rate-lowering strategies may take more time — and more diligence — from the client, but they can still be worthwhile. Improving the credit score can drop the mortgage rate by 0.39 percentage points, while boosting the down payment can knock it down by 0.18 points.
Eliminating debt tends to have the least impact of the four, but it can shave off another 0.05 percentage points.
"All of these things — they may not be easy — but they are within the households' control," Hale said.