How to Lower Interest Rates

September 13, 2023

by Christian Phillips

While mortgage rates continue to fluctuate and effectively price some buyers out of the market, determined homebuyers can reduce their interest rates with these simple tips.

Purchase discount points to reduce the interest rate. This is also referred to as “buying down the interest rate.” Points are not always required to be paid upfront; they can sometimes be charged to the loan balance or paid by the seller.

Pay off large amounts of debt. One of the main factors when calculating creditworthiness is the borrower’s debt-to-income ratio. Those with higher debt levels for accounts like auto loans and credit cards are considered a higher risk, resulting in higher interest rates.

Improve your credit score. Homebuyers should routinely review credit reports to identify irregularities or other issues that may impact their credit score.

Save for a larger down payment. Increasing your down payment can be one of the most influential factors in reducing a mortgage rate. Although it may take time and discipline, a higher down payment can produce a lower interest rate if additional factors remain favorable.

How to Lower Interest Rates

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How to Lower Interest Rates