If you're thinking about buying a home in Parker, Colorado, or anywhere in the Denver metro area, mortgage rates are probably a big part of the conversation.
That's understandable. Your interest rate has a direct impact on your monthly payment, how much home you can comfortably afford, and ultimately how much you'll pay over the life of your loan.
The frustrating part is that none of us can control where mortgage rates are headed.
Rates move based on a long list of factors, including inflation, economic reports, Federal Reserve policy, bond markets, oil prices, and events around the world. Trying to perfectly time all of those factors is nearly impossible.
But that doesn't mean you're powerless.
There are several things you can control that may help you qualify for a better mortgage rate or reduce your overall monthly payment.
1. Pay Attention to Your Credit
Your credit score can have a significant impact on the mortgage rate you're offered.
Generally, the stronger your credit profile, the more financing options you'll have available—and potentially at better rates and terms.
If you're planning to buy a home in the next several months, this is something worth addressing before you start seriously shopping.
Talk with a good mortgage lender and find out where you stand. There may be relatively simple steps you can take to improve your credit profile before applying for a loan.
And don't assume you need perfect credit to buy a home. You don't.
The important thing is understanding your situation and knowing what options are available to you.
2. Don't Assume There's Only One Type of Mortgage
One of the mistakes buyers sometimes make is focusing entirely on the advertised 30-year fixed mortgage rate.
That's only one option.
Depending on your financial situation, you may want to compare conventional, FHA, VA or USDA financing. You can also look at different loan terms and, in some situations, adjustable-rate mortgages.
Each has advantages, disadvantages and different qualification requirements.
That's why we encourage buyers to work with an experienced mortgage professional who can compare several options rather than simply quoting one interest rate.
It's also perfectly reasonable to talk with more than one lender.
When you're financing hundreds of thousands of dollars, even a relatively small difference in the rate, fees or loan structure can add up to a substantial amount of money.
3. Take a Serious Look at New Construction
This is one option buyers sometimes overlook.
Builders may offer financing incentives that aren't normally available when purchasing an existing home.
Depending on the builder, community and current inventory, those incentives can include mortgage-rate buydowns, closing-cost assistance, design-center credits or other financial incentives.
We've seen this throughout the Parker and Denver-area new-construction market.
That doesn't automatically mean a new home is the better purchase. You still need to compare the home's price, location, lot, property taxes, HOA or metro district costs, upgrades and resale considerations.
But if your primary concern is the monthly payment, builder financing incentives can make new construction worth investigating.
There's another important point here.
When you're considering a new home, remember that the builder's sales representative works for the builder—not for you.
Having your own real estate agent involved from the beginning gives you someone looking at the transaction from the buyer's side and helping you compare the builder's offer with other homes and financing alternatives.
Don't Let the Interest Rate Be the Only Factor
It's easy to become so focused on mortgage rates that you lose sight of the bigger picture.
The interest rate matters. But so do the price you pay for the home, your down payment, seller concessions, closing costs, property taxes, insurance, HOA fees and the condition of the property.
And in a market where buyers may have more negotiating leverage, there may be opportunities to ask a seller to contribute toward closing costs or an interest-rate buydown.
Sometimes negotiating the right overall deal can be just as important as getting the lowest advertised mortgage rate.
Bottom Line
You can't control what happens with mortgage rates next week, next month or next year.
But you can control how well prepared you are.
Work on your credit. Compare your financing options. Talk with more than one lender if necessary. Consider new construction and builder incentives. And look at the entire transaction—not just the interest rate.
If you're considering buying a home in Parker, Castle Rock, Franktown, Elizabeth, Highlands Ranch, Centennial, Aurora or the surrounding Denver metro area, we'd be happy to help you look at the options.
We've lived and worked in the Parker area for decades, and our job isn't to tell you when you have to buy. It's to give you the information you need to decide when buying makes sense for you.
Bob & Cheryl Bustin
Parker Colorado Home Center
RE/MAX Alliance