If you’re planning to buy a home soon, several strategies can help manage your expenses effectively. Mortgage rates in 2026 have been consistently above 6%, averaging around 6.625%. For a median-priced home of $403,200, this means a monthly payment of nearly $2,600 on a 30-year loan. A significant decrease in rates is not expected soon, as the Federal Reserve is unlikely to cut rates at its upcoming July meeting. Fannie Mae anticipates a year-end rate of around 6.4%.

Steps to Lower Borrowing Costs

Shop Around for Lenders

Lenders compete for business, especially when rates are high. Shopping around can yield favorable results. Real estate expert Dana Bull advises consulting with two to three lenders. Borrowers who do often save an eighth of a percentage or more. Per Freddie Mac, obtaining and comparing at least two mortgage rate quotes can save an average borrower $600 annually in interest. This can double to over $1,200 with four quotes.

Beyond rates, consider the Annual Percentage Rate (APR), fees, and other details on the loan estimate form. Compare processing, underwriting, credit report, and appraisal fees among lenders. Differences can impact costs significantly.

Improve Your Finances

With inflation high, lenders are risk-averse. Strong financials can secure better loan terms. Bill Dawley of Amegy Bank suggests focusing on credit scores, debt-to-income ratios, and down payment amounts. Conventional loans offer the best rates to those with a credit score around 740 or higher and a debt-to-income ratio of 36% or less. A 20% down payment can bypass private mortgage insurance, saving $30 to $70 monthly.

Prepare financially before house hunting. Jose Pascual of PSECU recommends improving credit scores, reducing debt, and increasing savings for a smoother buying experience.

Compare Service Providers

Offset high mortgage rates by saving in other areas of the home purchase. The ‘services you can shop for’ section on your loan estimate form shows where you can compare and save. Bill Dawley points out potential savings on title services, homeowner’s insurance, and closing fees.

Home insurance costs have increased by 23% in three years. Darren Tooley notes significant cost variations between insurance carriers, stressing the importance of shopping around.

Ask the Seller for Help

The number of sellers surpasses buyers by nearly 49%. Sellers offer concessions to attract buyers, including covering closing costs or buying down mortgage rates. Real estate broker Anthony Askowitz says buyer requests for concessions are common, with credits toward closing costs and interest rate reductions most prevalent.

Negotiate through your real estate agent. Anthony Askowitz advises approaching negotiations as a collaborative process for mutual benefit.

Conclusion

The Federal Reserve may not lower rates until 2027 or later, with no certainty of a dramatic fall. However, today’s buyers have leverage. By exploring multiple lenders, improving financial metrics, comparing insurance and services, and negotiating with sellers, borrowers can significantly reduce monthly payments.