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The average 30-year fixed-rate mortgage in the United States has a contract interest rate of 6.14%, according to the latest data from the Mortgage Bankers Association. This is welcome relief to home buyers, as it is sharply lower than the 7.9% peak we saw in late 2023.

While the average rate can save the typical U.S. home buyer thousands of dollars compared with 2023’s interest rates, that doesn’t mean that’s the rate you should settle for. In fact, there are two simple strategies you can use to make sure your mortgage rate is even lower than the average.

Shopping around can save you thousands of dollars

Without question, the most common mistake I see first-time home buyers make is simply accepting the first interest rate quote they get.

You might be surprised at how much of a difference shopping around for a mortgage rate can make. Different mortgage lenders often offer different mortgage rates to the exact same borrower. Usually, the difference is no more than one-eighth or one-fourth of a percentage point, but this can make a world of difference in overall costs.

As an example, if you’re buying a $500,000 house with a 20% down payment, and two lenders offer you rates of 6.25% and 6.125%, respectively, on a 30-year mortgage, it might not seem like it makes much of a difference. But the lower rate will save you $11,880 in interest over the 30-year term of the loan.

There’s no good reason not to apply for custom rate quotes with several lenders. It won’t even hurt your credit score — there is a special rule in the FICO formula that is designed to encourage rate shopping.

Depending on the particular version of the FICO® Score a lender uses, any mortgage inquiries that take place during either a 14-day or 45-day window (used by the newer version of this scoring system) are considered to be a single credit inquiry, regardless of how many mortgage applications the borrower submits. So to be safe, complete your applications within a 14-day window.

See how low your rate can be by shopping around. Click here to check and compare rates with some of our favorite mortgage lenders.

Work on your credit

Borrowers with excellent credit scores often qualify for mortgage rates that are significantly lower than the national average. While you can qualify for a conventional mortgage with a FICO® Score as low as 620, lenders typically give their best interest rates to borrowers with scores of 760 and above.

You might be surprised at the difference good credit can make. It isn’t uncommon to see a gap of a full percentage point or more between the average rates for customers with fair credit and those with excellent credit. I’ve already started to see rates well into the 5% range for borrowers with the top scores.

So, if you want the best possible mortgage rate, it could be a smart idea to take some steps to improve your credit score. Building truly great credit takes time, but there are some quick steps you might be able to take to have a positive impact, such as:

• Paying down credit card debt more aggressively to lower your credit utilization percentage.
• Deal with any old unpaid collection accounts on your credit (if you have any).
• Pay your bills on time, every month. If your credit history is relatively young, even a few months can make a difference.
• One credit hack you can try is to ask your credit card companies to increase your limit. Doing so also improves your utilization (your debt as a percentage of your credit limit) without you paying an extra dime.

The bottom line

The average U.S. home buyer gets a mortgage rate in the low 6% range right now, but if you shop around and get your credit score into the top tiers, you could do significantly better. Even a relatively small percentage difference in mortgage rates can save you thousands of dollars or more over the long run, so it’s worth the time and effort to get the lowest rate possible.

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