Mortgage interest rates hit a 15-month low: How to get an even lower rate now (2024)

The dream of homeownership has felt out of reach for many Americans in recent years. Between the high-rate landscape, elevated home prices and inventory shortages, a lack of affordability priced many would-be homebuyers out of the market — and many remain on the sidelines today. However, it appears that things may finally be changing for the better.

This week, mortgage rates hit their lowest point in 15 months, according toFreddie Mac, with the average rate for a 30-year fixed-rate mortgage dropping to 6.47%, down from 6.73% the week prior. This decline in mortgage rates comes after weaker-than-expected employment data increased the possibility of the Fed cutting interest rates soon.

But while the decline in mortgage rates is certainly good news for buyers and homeowners looking to refinance, there may be ways to sweeten the deal even further by securing the lowest mortgage rate possible.

Ready to start shopping for a home? Find the best mortgage rates available to you here now.

How to get a low mortgage interest rate now

If you want to secure the lowest mortgage rate possible right now, these strategies could help:

Buy mortgage points

Purchasing mortgage points, also known as discount points, is one simple strategy you can use to effectively lower your rate. While it varies by lender, each point you buy typically costs about 1% of your total loan amount and can reduce your rate by about 0.25%.

While this strategy requires a larger upfront investment, it can lead to significant long-term savings, especially if you plan to stay in the home for many years. To determine if this is the right move for you, calculate the break-even point (the time it takes for the monthly savings to recoup the cost of buying points).

Learn more about the top mortgage rates you could qualify for here.

Negotiate with lenders

Don't settle for the first offer you receive. Different lenders can offer vastly different rates and terms, even for the same type of loan, so take the time to get quotes from multiple lenders, including big banks, credit unions and online lenders.

Aim to get at least three quotes, and don't be afraid to negotiate. If you let lenders know you're comparing offers from multiple sources, they may be willing to offer better terms to win your business.

Opt for an ARM loan

While fixed-rate mortgage loans offer stability in terms of your rate, an adjustable-rate mortgage (ARM) loan could provide extra savings in certain situations. ARMs typically start with a lower interest rate than fixed-rate mortgages for an initial period (often five, seven or 10 years) before adjusting based on market conditions. If you plan to sell or refinance within that initial period, an ARM loan could result in a lower rate, saving you money on interest.

That said, there are risks to using an ARM loan. While rates are expected to drop in the near future, you should know what the outcome would be if interest rates rise significantly after your ARM's fixed period ends. It may help to calculate potential payment scenarios under different rate environments to ensure you can afford possible increases.

Obtain a shorter-term mortgage loan

Opting for a shorter-term mortgage, such as a 15-year fixed-rate mortgage loan, may result in locking in a lower mortgage rate. Lenders typically offer lower rates for shorter-term loans because they're taking on less risk. For example, the average rate on a 30-year conventional mortgage loan is currently 6.47%, according to Freddie Mac. On the other hand, the average rate on a 15-year conventional mortgage loan is 5.63% — nearly a point lower.

Keep in mind, though, that shorter-term mortgage loans come with higher monthly payments, as you're paying your loan off at an expedited pace. Before choosing this option, be sure to carefully assess your budget to ensure you can comfortably afford the higher payments.

Make a larger down payment

Putting more money down can often lead to a lower interest rate. A larger down payment reduces the lender's risk, as you'll have more equity in the home from the start. Aim for at least 20% down if possible, which will also help you avoid the extra costs that come with private mortgage insurance (PMI). Some lenders may offer even better rates for down payments of 25% or more, but you'll have to shop around to find out.

The bottom line

Securing the lowest mortgage rate possible is important right now. Mortgage rates may be declining, but they're still much higher than they were just a few years ago, so obtaining the lowest rate possible could mean the difference between affording a home and being priced out of today's market.

Getting a low mortgage rate isn't just about short-term savings, either. Even a small reduction in your rate can translate to tens of thousands of dollars saved over the life of your loan, so take the time to determine which strategies would work best for you and then implement them. That way, you can be sure you're getting the best mortgage rate possible for your unique situation.