How First-Time Buyers Can Lower Their Mortgage Rate Even in a High-Rate Market

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For many first-time homebuyers, today’s high mortgage rates can feel like a major roadblock. With rates hovering well above recent historical lows, the idea of locking in a long-term loan may seem daunting. But while buyers can’t control market interest rates, they have more influence than they might realize when it comes to securing a lower mortgage rate.

One of the most straightforward approaches is to buy a home within your budget now and refinance later. Since mortgage rates fluctuate with broader economic trends, many experts expect them to eventually come down. When they do, refinancing could reduce your monthly payment and total interest paid over the life of your loan. This strategy allows buyers to enter the market without waiting on the perfect rate.

In the meantime, there are several ways buyers can pursue lower rates today by adjusting their mortgage terms or improving their financial profiles.

One often-overlooked option is choosing a 15-year mortgage instead of the standard 30-year term. According to housing expert McLaughlin, 15-year mortgages typically come with interest rates that are one to 1.5 percentage points lower than 30-year loans. The payment may be higher, but it won’t be double, due to how mortgage amortization works. In most cases, buyers can expect payments that are only 50% to 60% higher, while building home equity twice as fast and saving thousands in interest over time.

Adjustable-rate mortgages (ARMs) also present an alternative for buyers who plan to stay in a home for a limited period or expect rates to drop in the near future. These loans usually have lower starting rates than 30-year or even 15-year fixed mortgages, offering initial affordability. Most ARMs come with a fixed rate for the first five or seven years, after which the rate adjusts based on market conditions. Buyers should weigh the potential risk of future rate increases against the upfront savings, but for those planning to refinance or move within a few years, an ARM could be a smart financial move.

Another creative tactic is negotiating a buydown credit with the seller. In this scenario, the seller agrees to cover part of the buyer’s interest cost for the first few years of the loan, effectively lowering the monthly mortgage payment. McLaughlin notes that this is becoming increasingly common in today’s market, especially when sellers are motivated to close quickly. By prepaying some of the interest, buyers may be able to temporarily reduce their rate from 7% to 6%, easing the financial burden in the early years of homeownership.

Beyond mortgage structures and negotiation tactics, buyers can also reduce their rate by improving their financial health. Lenders reward lower-risk borrowers with better rates, so taking time to boost your credit score, pay down existing debt, and save for a larger down payment can have a meaningful impact. A study by Realtor.com found that these steps—combined with shopping around among lenders—can reduce a buyer’s rate by up to 1.5%. On a $500,000 home, that’s a potential monthly savings of $400, a significant win for most first-time buyers.

There’s also substantial variation in mortgage rates across lenders, even for borrowers with similar profiles. McLaughlin emphasizes that the difference between the best and worst rates can be surprisingly large, which makes comparison shopping essential. Requesting quotes from multiple lenders and comparing loan estimates line by line can reveal savings opportunities that many buyers overlook.

In a high-rate environment, purchasing a home may feel out of reach—but with strategic planning and the right approach, buyers can position themselves for a more affordable mortgage. Whether it’s opting for a shorter loan term, negotiating with the seller, or improving your credit and finances before applying, the decisions you make today can pay off for decades to come.

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What to Know About Your Insurance Before the Next Big Storm Hits

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When Hurricane Michael barreled through the Florida Panhandle, it left a path of destruction and a lingering question for homeowners across the country—were they truly covered?

Many people felt confident in their homeowners insurance, and Consumer Reports data supported that confidence. In a recent survey of over 85,000 members, most respondents said they were satisfied with their insurance carriers. Top-rated companies like USAA, Amica, Erie, MetLife, and Auto-Owners consistently received high marks for service.

But high satisfaction can sometimes hide blind spots. You might be overpaying, underinsured, or unprepared for certain risks without even knowing it. Before the next disaster strikes, here’s what to check.

Are You Paying Too Much?

Unlike auto insurance, homeowners policies don’t change dramatically in price between companies, but the difference can still be hundreds or even over $1,000 a year. If you’ve been with the same carrier for years, it may be time to compare.

Take action by getting quotes from top-rated insurers, and consider using an independent agent who can shop across multiple providers. You can find one at TrustedChoice.com, a directory maintained by a national agent association. Also explore direct-to-consumer companies like Amica or USAA, which consistently earn high marks.

Check Your Actual Coverage

Has your home value gone up? More importantly, have labor and construction costs increased in your area? If so, your current policy limits might not be enough to fully rebuild after a disaster.

You also need to consider specific gaps. For instance, most standard policies don’t cover flood damage or earthquakes, and they may have restrictions on windstorm or hurricane coverage in high-risk areas. Even your dog’s breed could limit liability coverage.

Take action by upgrading to extended replacement-cost coverage. This option covers up to 25 percent beyond the listed dwelling limit, especially helpful after disasters when labor and material costs spike.

Also, protect valuables like electronics, sports equipment, and tools with policy endorsements. Jewelry and fine art should be insured through a separate “floater” policy with no deductible and full-value protection. And if you run a business from home, get a commercial add-on. Your laptop and printer might not be fully covered otherwise.

Do You Have Flood Insurance?

Homeowners insurance does not cover flooding from outside the home, whether from storm surges, heavy rains, or poor drainage. You need separate flood insurance, usually through the National Flood Insurance Program (NFIP), which is federally backed.

The cost can be as little as a few hundred dollars a year for those outside high-risk zones. And it’s worth noting that more than 20 percent of all NFIP claims come from low or moderate-risk areas.

Unfortunately, NFIP policies require a 30-day waiting period, so for homeowners and renters in the Florida Panhandle, buying flood insurance after Hurricane Michael was too late for that storm. But it is not too late to prepare for the next.

Renters, Don’t Skip This

If you rent, your landlord’s policy does not cover your personal belongings. That includes clothes, furniture, electronics, and anything else you brought with you.

Take action by purchasing renters insurance—it typically costs just $12 to $20 a month and includes liability coverage. As with homeowners policies, renters insurance does not cover floods or earthquakes, so be sure to add that separately if you live in a risk zone.

Your Credit Score Affects Your Premium

In most states, insurers use something called a credit-based insurance score to set your premium. It is not the same as your FICO score, but it still factors in your credit history. A low score could result in much higher premiums.

Take action by asking for your insurance score and reviewing it. Improving your credit, paying bills on time, and correcting report errors can all help. If you’ve had a major life event like a medical crisis or the death of a spouse, ask for an “extraordinary life circumstances exception.” Some states require insurers to consider that.

Beware the Hail Damage Trap

While most policies cover hail, some insurers have started excluding cosmetic damage—like dented siding that’s still functional. Others require percentage-based deductibles that can cost thousands before coverage kicks in.

Take action by requesting a fixed-dollar deductible instead of a percentage. And if you live in a hail-prone area, ask for an endorsement that includes cosmetic coverage so your whole house can be re-sided even if just one or two walls are damaged.

Final Word: Don’t Wait for the Next Storm

Peace of mind starts with knowing what your policy really covers. The time to review it is before the winds pick up again. Whether you’re a homeowner or renter, whether you live in a floodplain or just near one, taking these steps now could save you a fortune—and a whole lot of stress—later.

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