How to find the best mortgage rate this October, according to experts

The past two years have seen mortgage interest rates soar, pricing many potential homebuyers out of the market. But things are looking up. Mortgage interest rates have fallen to their lowest point in two years and the Federal Reserve just cut rates for the first time this year. Analysts predict more cuts could follow, potentially easing the path to homeownership for many Americans.

Despite this more favorable climate, finding the right mortgage for your situation can be tricky. While a lower rate can save you money over time, experts emphasize that the lowest rate isn’t always the best deal. So how do you find a mortgage that fits your needs in October’s changing market? We asked three mortgage specialists for advice. Below we gathered their recommendations for finding the best rates this fall.

Start by seeing how low of a mortgage interest rate you could secure here.

How to find the best mortgage rate this October, according to experts

Three key strategies could help you find a better rate: improving your credit score, exploring different loan types and looking beyond the interest rate. Let’s look into each in greater detail:

Improve your credit score

Before you start shopping for a mortgage, take a close look at your credit report.

“[I’ve seen many cases] where [I’m] pre-approving a client to purchase a home and [we discover] errors or incorrect debts [on their credit report] … impacting their ability to qualify for a loan,” warns Joel Berman, a senior loan officer at Synergy One Lending, Inc.

He suggests getting a copy of your report and checking it carefully for mistakes. If you spot any errors, dispute them right away.

Once you’ve confirmed your report is accurate, improve your credit score if it’s low. “The quickest way to boost your credit score is to pay down credit card balances … and always pay bills on time,” says Debbie Calixto, sales manager at loanDepot.

She recommends keeping your credit card balance at 30% or below your credit limit. Dean Rathbun, a mortgage loan officer at United American Mortgage Company agrees, noting that low credit use shows lenders you can manage credit responsibly. This works in your favor when trying to get a lower mortgage rate.

See what rate you’re currently eligible for here now.

Consider different loan types

Calixto explains that your ideal loan type depends on several factors including credit scores, down payment and property type.

For example, if you’ve served in the military, a VA loan might offer you a no-down-payment option with a lower rate. If your credit score isn’t perfect, an FHA loan could be a good choice, with down payments as low as 3.5%.

But don’t assume a 30-year fixed-rate mortgage is your only option. Calixto points out that many homebuyers don’t plan to stay in their first home for three decades.

“Adjustable-rate mortgages (ARMs) may [give you] a lower rate during the fixed-rate [term],” she explains. Pursuing one of these could make sense if you’re moving in a few years or expect your income to increase over time.

Look beyond the interest rate

“One of the worst things a borrower can do is be so rate-focused they miss what’s important,” says Berman.

Why? The advertised rate doesn’t always tell the full story. For instance, you might find an incredibly low rate online, only to learn it comes with hefty fees.

A borrower who sees a rate “way below market pricing … may not [realize it] comes with a 2%-point buy-down fee,” Berman notes. He also points out that some online lenders make it hard to speak with a real person, which is frustrating when you have questions or concerns.

Instead of chasing the lowest advertised rate, Berman suggests working with a local mortgage loan officer.

They can offer competitive rates and their experience and you’ll have someone to discuss your options with in person. This face-to-face interaction can make negotiating easier and help you understand all aspects of your loan — not just the interest rate.

Remember, the goal is to find the best overall deal, not just the lowest number.

Learn more here.

The bottom line

While rates are trending down, experts advise focusing on what works for you right now, rather than scouring or waiting for the lowest rates. “I always recommend locking in an interest rate when a homebuyer is comfortable with the payment and the costs,” says Calixto.

Rathbun adds a word of caution about sitting on the sidelines for too long: “If [you] wait for rates to go down to purchase a home, [you’ll likely compete] with other buyers … bidding the house up to a higher price.”

So, what’s your next move to finding the best mortgage rate this month?

Start by checking your credit report and improving your score if needed. Then, talk to several local mortgage officers. Discuss different loan types and get a full picture of rates, fees and terms. The best rate for you is one that fits your overall financial situation and home-buying goals.