Housing affordability hasn’t gotten better in 2025. Record-high home prices and near-7% mortgage rates are making it difficult for prospective buyers everywhere. Even a 1% difference in your mortgage rate can save you hundreds of dollars each month and tens of thousands of dollars over the course of your loan. Remember, the mortgage rates you see advertised represent the average interest rates that borrowers are offered for home loans at a given time. Depending on your financial situation, the rate you qualify for could be significantly lower. None of us can control the market forces that influence mortgage rates. However, by improving your credit score and negotiating with multiple lenders, you can get a better deal on your home loan.What is considered a ‘good’ mortgage rate?The majority of US adults would only consider purchasing a home if rates were to drop to 4% or below. Yet most mortgage forecasts don’t project average rates dipping below 6% this year.In a historical sense, a good mortgage rate is generally at or below the national average. The 30-year fixed mortgage rate since 1971 has averaged 7.72%, according to Freddie Mac. In the last year, average mortgage rates mostly fluctuated between 6% and 7%.With that in mind, getting a rate in the mid to low 6% range is pretty good, according to Sarah DeFlorio, vice president of mortgage banking at William Raveis Mortgage.But affordability is relative to your overall financial situation. And because mortgage rates can change daily and even hourly, the definition of a “good” rate can change quickly. “What matters is the rate you can get today,” said Colin Robertson, founder of The Truth About Mortgage. According to Robertson, the only way to know if you’re getting a good deal is to speak with a few different lenders and brokers, and then compare their quotes against the daily or weekly averages. Read more: Still Chasing 2% Mortgage Rates? Here’s Why It’s Time to Let Them GoHow a lower mortgage rate saves you moneyLowering your mortgage rate by even 1 percentage point can make a meaningful difference in your budget, translating into about 10% savings on a monthly mortgage payment. For instance, let’s say you buy a home for $400,000 and make a down payment of 20% on a 30-year fixed-rate mortgage. The difference between a 7% rate and a 6% rate means a savings of $210 a month, which amounts to $75,748 saved over the life of the loan. Here’s a quick look at how monthly mortgage payments compare for the same home with a 7%, 6% and 5% rate:7%$2,128.97–6%$1,918.56$210.41$75,747.605%$1,717.83$411.14$148,010.40How to reduce your mortgage rate by 1%Improving your credit score, increasing your down payment, buying points and negotiating your rate can help you save money on your mortgage. Taking some (or all) of these steps can reduce your rate by 1% or even more. 1. Improve your credit scoreLenders look at your credit score to decide whether you qualify for a home loan and what interest rate you r
Dom. Gen 5th, 2025
