Worried About Interest Rates? Here's How Buyers Are Lowering Them Right Now

Almost every buyer I talk to right now asks some version of the same question. Should I wait for rates to come down?

I get it. Rates are the first thing you see in the headlines, and watching your monthly payment go up with every quarter point is scary. But in my experience, waiting is not always the safer move, and there's a lot more you can do about your rate than most buyers realize.

Why waiting can cost you

Rates have been climbing again, and I understand why that makes people want to hit pause. But here's the thing about waiting for rates to drop. You're not the only one waiting. When rates come down, buyers who've been sitting on the sidelines all come back at once. That's when you see multiple offers, homes selling over asking, and very little room to negotiate.

Right now, a lot of those buyers are still waiting. That means less competition, homes sitting a little longer, and sellers who are more willing to talk. Whether you're looking at a view home in the Hollywood Hills, a condo in West Hollywood, or a family home in the Sherman Oaks foothills, that's a real opening in neighborhoods where good homes don't come up often.

There's a saying in real estate, marry the house, date the rate. You can't change the house once prices go up. You may be able to refinance down the road if rates drop, although nobody can promise that.

How to lower your rate

Ask the seller to pay for a rate buydown. Instead of asking for a lower price, you can ask the seller for a credit that goes toward lowering your interest rate. Depending on the numbers, this can do more for your monthly payment than the same amount off the price. When homes are sitting longer, sellers are more open to it.

A temporary buydown. With a 2-1 buydown, your rate is lower for the first year, a little higher the second year, and then settles at the full rate. It gives you breathing room in the first couple of years, and it's often paid for with a seller credit.

A permanent buydown with points. You, or the seller, pay an upfront fee called points to lock in a lower rate for the life of the loan. It makes the most sense if you plan to stay in the home a long time.

Shop more than one lender. Rates and fees can vary more than people expect. I always encourage my buyers to talk to at least two or three lenders and compare their Loan Estimates side by side.

Look at your credit and down payment. A higher credit score and a bigger down payment can both get you a better rate. Even small improvements before you apply can make a difference.

Ask about other loan options. Adjustable-rate mortgages, and in some cases assumable FHA or VA loans, can come with a lower starting rate. These aren't right for everyone, so go over the details carefully with your lender.

How I help

My job is to get you the best possible deal, and right now that often means negotiating on more than just price. I'll help you figure out whether a price reduction or a rate buydown credit does more for you, and I'll work with your lender to make sure the numbers actually work for your monthly budget.

I grew up in Laurel Canyon and still live in the Hills, and I've sold homes across Hollywood Hills West and East, West Hollywood and Sherman Oaks. I know these neighborhoods and how to negotiate in them. If rates have you feeling stuck, let's talk through your options. Happy to connect you with a few lenders I trust, too.

I'm a real estate agent, not a lender. Rates, programs and qualifications change often, so please talk to a licensed loan officer about your own situation.

Paula Present · REALTOR® · DRE #02224124 · eXp Realty of Greater Los Angeles, Inc · 323-487-0345 · paulapresenthomes.com