Ingenious Strategies for Homebuyers to Secure Reduced Mortgage Rates in 2024

If you’re looking to buy a new house, you might be concerned about how to manage the mortgage, especially with rates hovering around 7%. Some buyers are finding creative ways to secure lower mortgage rates.

### Consider an Assumable Mortgage
One option is to purchase a home with an assumable mortgage. This means you take over the seller’s existing mortgage instead of getting a new loan. This can sometimes result in a lower interest rate than what’s currently available. Loans backed by the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and Department of Agriculture (USDA) are often eligible for assumption. However, most conventional loans are not, due to a “due on sale” clause that requires the seller to pay off the loan when the property is sold.

### Know the Risks
It’s important to understand the risks involved. You will need to cover the equity the seller has built up in the house. For instance, if you’re buying a $350,000 home and the seller’s mortgage balance is $200,000, you’ll need to pay the remaining $150,000 either in cash or through additional loans. This can be a significant amount if the seller has paid off a large portion of the mortgage. Additionally, you might not be approved for the loan, and you’ll have to adhere to the original terms, leaving no room for negotiation.

### Check Out Other Options
If an assumable mortgage isn’t suitable for you, there are other strategies to secure a lower mortgage rate. These include making a larger down payment, improving your credit score, and opting for a shorter-term loan, such as 15 or 20 years instead of 30. These steps can help you qualify for a better rate.