How to get the lowest mortgage rate possible

Core Insights - The average 30-year mortgage rate has decreased after three weeks of increases, providing an opportunity for borrowers to secure better rates than a year ago [1] - Analysis of nearly 5,000 mortgage lenders reveals that the lowest rates are often offered by lenders catering to a select clientele, making it challenging for typical borrowers to access these rates [2][3] Mortgage Rate Strategies - Improving credit scores can lead to significant savings on mortgage rates, with a higher score resulting in lower interest rates [4][5] - A lower debt-to-income (DTI) ratio is crucial for obtaining favorable mortgage rates, with a target DTI of 25% or less recommended [6] - Making a larger down payment can also help secure a lower mortgage rate, with first-time home buyers' median down payment at 9% in 2024 [8] - Buying discount points can reduce ongoing mortgage rates, with one point typically lowering the rate by a quarter of a percentage point [9][10] - Interest rate buydowns can temporarily lower mortgage rates, but this option is rare and requires careful consideration of long-term costs [14][15][16] - Adjustable-rate mortgages (ARMs) are becoming popular again, offering fixed rates for an initial period before adjusting, but require diligent shopping [17][18] - Shorter-term mortgages, such as 15- or 20-year loans, generally come with lower interest rates compared to traditional 30-year terms [19] - Assumable mortgages allow buyers to take over existing loans, but are typically limited to specific loan types like FHA, VA, or USDA loans [20] Current Market Context - As of now, many existing homeowners have mortgage rates below 5%, making refinancing less appealing for them [25] - The lowest recorded mortgage rate was 2.65% in January 2021, and it is unlikely rates will return to such lows without a significant economic event [27][28] - VA loans, particularly 15-year VA loans, are noted for typically having the lowest mortgage rates [29]