Waiting for Mortgage Rates to Drop? Here’s What to Do Now

The past few years—especially the last few months—have been volatile for mortgage rates. With an unpredictable economy, inflationary concerns, and shifting global trade policies, the road to lower rates is looking longer and more gradual than expected.

But while you can’t control the market, you can take steps right now to set yourself up for a lower mortgage payment when rates do drop. Here’s how.

How to Improve Your Credit Score for a Better Mortgage Rate

Your credit score directly impacts the mortgage rate you qualify for. If you’re planning to buy a home soon, start tracking and improving your score today.

Check the Right Credit Score

One common mistake? Relying on credit scores from banks, credit cards, or auto lenders. Mortgage lenders use a different model—the Classic FICO Score. To check your actual mortgage credit score, visit myfico.com for a one-time report or ongoing monitoring.

Boost Your Credit Score with These Steps:

• Make all payments on time. Set up auto-pay for credit cards, loans, and bills.
• Dispute inaccuracies. If you spot errors on your report, contact the credit bureaus to resolve them immediately.
• Keep credit card balances low. Try to use less than 30% of your available credit.
• Pay down balances or increase your credit limit to improve your credit utilization ratio.

Most lenders look for a minimum of 620 for conventional loans, but a score of 740+ can help you secure the lowest rates. A mortgage professional can offer credit advice tailored to your situation. The sooner you start, the better your chances of locking in a great rate.

Why Home Insurance Affects Your Mortgage Payment

Your monthly mortgage payment includes more than just your loan—it also covers home insurance, which can make a big difference in your overall cost.

Avoid Costly Mistakes with Insurance

Utah is still one of the more affordable states for home insurance, but rising national premiums—driven by disasters like the California wildfires—are starting to have an impact. Insurance companies are also becoming more selective about applicants with recent claims.

Big Mistake: Many homebuyers don’t realize that filing an insurance claim before buying a home can lead to higher premiums or even coverage denial.

What You Should Do:

• Avoid filing any claims (home, auto, or otherwise) in the six to twelve months before applying for a mortgage.
• Compare insurance providers early to find the best coverage at a competitive price.
• Bundle policies (home and auto) to qualify for discounts.

Did you know? Insurance companies are becoming more selective, so even minor claims could lead to higher costs on your home insurance. Shopping around for a well-priced insurance policy is one of the easiest ways to keep your monthly mortgage payment as low as possible.

A Larger Down Payment Can Save You Thousands

A larger down payment can lead to significant savings. Here’s how:

• Reduce or eliminate private mortgage insurance (PMI). If you put down at least 20%, you can avoid PMI altogether.
• Lower your interest costs. Borrowing less means paying less interest over the life of the loan.
• Improve your loan terms. A stronger financial position can qualify you for better rates and lender incentives.

Planning ahead? Even if you’re not ready to buy yet, setting aside extra funds now will put you in a stronger position when the time is right.

Why a 15-Year Mortgage Can Be a Smart Move

Waiting for rates in the 5’s? You can get them now! A 15-year mortgage typically offers rates at least 1% lower than a 30-year loan. While the monthly payment is higher, the savings over time can be substantial—especially if you’re putting more than 20% down.

Smart Strategy: If you have cash set aside for a large down payment, consider shifting some of it toward a shorter-term loan. You can always refinance later if needed, but locking in a lower rate now can be a smart financial move.

Final Thoughts: Take Control of What You Can

While you can’t control mortgage rates, you can take proactive steps to strengthen your credit, manage insurance costs, save for a larger down payment, and explore shorter loan terms. These strategies will put you in the best position for a lower monthly mortgage payment—no matter where rates stand.