3 smart mortgage rate moves to make with inflation cooling

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News this week that the inflation rate dropped again in June – the third consecutive month when it did so – was welcome for millions of Americans, but perhaps most so for homebuyers. Those looking to buy a home in recent years have been burdened with the highest mortgage interest rates in decades . And that's after rates just hovered near record lows in 2020 and 2021.

But, a consistently cooling inflation rate could be an indicator of upcoming reductions in the federal funds rate. And while there's only a small chance that the rate will be cut in the Fed's July meeting, a reduction is possible for later this year, perhaps even before the summer is out. With this knowledge, then, homebuyers looking for the best rate possible may want to start making some strategic moves now. Below, we'll break down three they should make with inflation cooling.

Start by seeing what mortgage rate you could lock in right now .

3 smart mortgage rate moves to make with inflation cooling

A changing inflation and rate climate that benefits borrowers should spark new movement, particularly on behalf of homebuyers. Here are three things to consider doing now:

Start shopping around

While most lenders will offer buyers approximately the same rate, it won't be identical. And the terms and closing costs could differ significantly. Those differences could add up to significant savings, both in what you pay in closing and what you pay in a rate over the lifespan of your loan. So start shopping around now to see what deals you can find.

While a formal rate cut courtesy of the Fed will ensure that borrowers lower their mortgage rates, many already are in anticipation of that reduction to come. So you may be able to find an ideal lender now instead of waiting for the Fed to take action.

Start shopping for mortgage rates online today .

Make sure your credit is in top shape

When shopping around, you'll see the average mortgage rates listed, but often those including mortgage points . And they assume you have top credit. If you don't, you won't be offered the best rate. So it's critical to make sure your credit is in top shape now.

Mortgage rates have been high for much of the last two years, and you won't want to miss the opportunity to finally secure a better one due to a mediocre credit score. Pay down debts, don't take out any new debt and review your credit report now to improve your credit score as much as possible.

Know which product you intend to use

Mortgage points serve as a fee lenders charge buyers for a lower rate, which could be something worth exploring right now as rates could soon be falling further. An adjustable-rate mortgage , meantime, is one in which the rate changes over time, which can also be beneficial for buyers willing to take the risk to secure the lowest interest rate possible right now. So, once you've shopped and selected a lender, consider speaking to them about these products now so you'll be better prepared to choose the right product when the market timing improves.

Start exploring all of your mortgage options online now .

The bottom line

A cooler inflation rate is an opportunity for millions of borrowers but particularly homebuyers. With an interest rate reduction seemingly imminent, buyers should start shopping for lenders now and doing their due diligence to improve their credit standing as much as possible. They should also explore all mortgage products - from conventional loans to more - so that they're ready to act when and if a mortgage rate cut finally materializes. By taking these steps now buyers can save both time and money.