Many hopeful homebuyers are keeping an eye on mortgage rates, anticipating a significant drop before making a purchase. But will that actually happen? According to the latest expert forecasts, rates may decrease, but not as much as some had initially expected.

What to Expect for Mortgage Rates

Just a few months ago, experts projected that mortgage rates could dip below 6% by the end of the year. However, updated forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and Wells Fargo now suggest that rates are more likely to stabilize in the 6.5% to 7% range.

While this may not be the dramatic drop some buyers were hoping for, there are still plenty of opportunities to make homeownership more affordable. And if life circumstances—like a job change, growing family, or relocation—necessitate a move, waiting for significant rate decreases may not be ideal.

Smart Financing Strategies for Today’s Market

Since rates may not fall as much as anticipated, exploring alternative financing solutions could be a game-changer. Here are three options to discuss with your lender that might make buying a home more manageable:

1. Mortgage Buydowns

A mortgage buydown allows you to pay an upfront fee to lower your mortgage rate for a set period, reducing your initial monthly payments. This can be particularly beneficial for buyers looking to ease their financial burden in the early years of homeownership. In fact, 27% of real estate agents report that first-time homebuyers are increasingly requesting buydowns from sellers to make home purchases more affordable.

2. Adjustable-Rate Mortgages (ARMs)

Adjustable-rate mortgages (ARMs) generally start with a lower interest rate than traditional 30-year fixed loans. This makes them an attractive option, especially if you anticipate refinancing later or expect rates to decline in the future.

If you’re concerned about the risks associated with ARMs, it’s important to note that today’s ARMs are much different from those issued before the 2008 housing crash. Lance Lambert, Co-Founder of ResiClub, reassures buyers by explaining:

“. . . ARM products today are different from many of the products issued in the mid-2000s. Before 2008, lenders often approved ARMs based on borrowers’ ability to pay the initial lower interest rates. And sometimes they didn’t even check that (remember Ninja loans). Today, adjustable-rate borrowers qualify based on their ability to cover a higher monthly payment, not just the initial lower payment.”

In other words, stricter lending regulations and verification processes make ARMs a safer option than they were in the past.

3. Assumable Mortgages

Assumable mortgages allow buyers to take over the seller’s existing loan—including their lower interest rate. With over 11 million homes qualifying for this option, according to U.S. News, it’s a strategy worth considering if securing a lower rate is a priority for you.

Bottom Line

Waiting for a major drop in mortgage rates may not be the best approach. Instead, exploring options like mortgage buydowns, ARMs, or assumable mortgages could make homeownership more affordable right now. Connect with a local lender to explore the best strategy for your situation.

Have questions about how these financing options could work for you? Reach out to Mike Panza and the team at [Panza Home Group](https://panzarealestate.com/team/mike-panza) for expert guidance and personalized advice on navigating today’s market.