Mortgage Rates Just Hit an 8-Month Low. Do These Things to Save Even More

If you're someone who's been looking to buy a home, you're no doubt aware that mortgage loans have been pretty expensive to sign for quite some time. But right now, as a buyer, you may be in for a bit of relief.

The average 30-year mortgage rate just fell to 6.6% for the week ending Jan. 18, says Freddie Mac. That's the lowest level seen since May 2023.

To give you some context, let's say you were looking at signing a fixed 30-year, $200,000 mortgage at 7% a few weeks ago. That would've given you a monthly payment of $1,330 for principal and interest. At 6.6%, that same loan translates to a monthly payment of $1,277 for principal and interest. That's a monthly savings of $53 and an annual savings of $636.

But while it's a good thing that mortgage lenders have been charging less to borrow, the reality is that there are steps you can take as a buyer to save even more on your mortgage. Here are some to consider.

1. Boost your credit score

The higher your credit score, the more competitive a mortgage rate you're likely to snag. That's because borrowers with higher scores read as less of a credit risk to lenders.

If your credit score needs work, some steps you can take to boost it include:

• Paying bills on time
• Lowering existing credit card balances
• Correcting credit report errors

Some of these steps might take longer than others to produce results, such as paying bills promptly. But they're still worth taking.

2. Make a higher down payment

The more money you put down on your home, the less you have to borrow. And the less you borrow, the less mortgage interest you're apt to accumulate.

Plus, you might snag a lower interest rate from a lender when borrowing less. That's because a smaller loan amount translates into less risk on your lender's part.

However, one thing you don't want to do is empty out your savings account to make a higher down payment. Make sure to keep enough money on hand to cover costs such as:

• Moving
• Closing costs on your mortgage (unless you roll them into the loan and pay them over time)
• Initial home repairs
• Furniture

3. Pay off your mortgage in less time

Last week, the average 30-year mortgage rate fell to 6.6%. But the average 15-year mortgage rate was 5.76%. So clearly, paying off your mortgage in a shorter amount of time could result in a lower borrowing rate.

However, we saw earlier that a 30-year, $200,000 mortgage at 6.6% results in a monthly payment of $1,277. A 15-year, $200,000 loan at 5.76% results in a monthly payment of $1,662. That's an extra $385 a month, or $4,620 a year that you're paying.

A higher mortgage payment like that may be too much of a strain on your budget. But if it's not, know that with a 15-year loan, you'll pay a total of $99,141 in interest. With a 30-year loan at 6.6%, you'll pay a total of $259,832. That's a difference of over $160,000 in your lifetime, which is huge.

Hopefully, as a buyer, you're encouraged to see that mortgage rates have started to come down a bit. But know that certain moves on your part could leave you paying even less in the course of borrowing for a home.