With today's mortgage ratesas of July 2023, potential homebuyers are paying much more over the lifetime of their loans than borrowers just a few years ago. In fact, high interest rates coupled with can make buying a home in 2023 an uphill battle.
But if you're on the hunt for a new home today, you can help yourself out by becoming familiar with market conditions and what you can do to ensure you score theavailable. Knowing what to expect from rate fluctuations over the next few months, as well as how you can improve your individual loan application, can help you save money in the long run.
Get started by comparing today's top mortgage rates here.
What to expect from mortgage rates in 2023
It's difficult to make any predictions for how mortgage rates will move, says Deviree Vallejo, a Denver-based real estate expert, "as there are so many economic, political and social factors contributing.
While predicting the future is impossible, buyers looking to lock in a rate in 2023 may benefit from knowing what those factors are that can influence rates over the next several months.
The latest market survey report from Freddie Mac attributes rising mortgage rates to a number of factors. "This upward trend is being driven by a resilient economy, persistent inflation and a more hawkish tone from the Federal Reserve," the report says.
While the Fed has currently, it's also signaled that rates before the end of the year, which could also factor into rising mortgage interest rates. But there may be some relief for borrowers if inflation continues to trend downward. Reaching a lower level of inflation could bring an end to rising rates — even if they remain elevated for a while.
Andsay the Fed's moves, and the way markets react to them, could influence mortgage rates to by early next year if not this year. "I personally expect them to remain stable or drop a little through the end of the year," Vallejo says.
How to get a good mortgage rate today
When it comes to financing a mortgage this year, Vallejo says potential buyers should "perform due diligence and find the best rate."
First, focus on the factors you can control. Typically, applicants with the best credit. Before you apply for a mortgage, and credit report. Then, start building habits that can help improve your credit history: pay your bills on time and in full, reduce the amount of debt you owe and don't apply for new loans or lines of credit too close to your mortgage application.
It also pays tobefore you decide on a rate. Using the same loan details and application information, compare pre-approval offers from multiple lenders to narrow down the best rates you can qualify for.
Don't forget that your mortgage loan rate isn't the only determining factor of your home buying journey. While it can pay to get the best possible rate, there are plenty of other things to consider before you lock in your loan. Plus, there's always the potential to refinance once rates are lower in the future.
"I can't reiterate enough that someone should only buy a house based on their personal financial readiness and not based on where economists are predicting interest rates to go," says Colin Zizzi, CFP, founder of Zizzi Investments. "Yes, financing a home is much more expensive today than a year ago, but that's only one factor to consider in the home buying process."
The bottom line
If you're in the market to buy a home in 2023, be prepared to do some research and have patience throughout your search. While mortgage rates may continue to rise for a bit, they could subside in coming months if, among other factors, the Fed ends its rate hike cycle. But you can also make moves to ensure you get the best possible rate in any market by improving your credit and overall application, preparing yourself with market knowledge and comparing different offers from lenders before you lock in a rate.
Get started today by comparing the best mortgage rates available now.
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