Navigating Current Interest Rates to Land a Dream Property

As interest rates on mortgages continue to make headlines, it can be hard to know where to look. Are rates finally taking a dip? What does that mean for prospective homebuyers? While every situation is different, it’s largely true that interest rates for home loans have fallen in recent months. Starting in early 2022, interest rates rose steadily, peaking in the fall, said Chad McGlothlen, director of lending at Compeer Financial. Since then, secondary market home loans, like Fannie Mae and Freddie Mac loans, have fallen an average of 0.5 to 1%. However, there’s more than meets the eye when it comes to these declining interest rates. Here are a few things buyers should keep in mind: 

Not all loans are created equal

While many recent news articles and expert insights look at secondary market home loans, there are other kinds of interest rates to consider. For example, portfolio lending has fared a little better in recent months, with drops closer to 1%. In a portfolio home loan, a lender uses their own funding sources for a loan rather than selling it to a third party. Aside from offering a potentially lower interest rate, portfolio lending can also cover a wider variety of properties. At Compeer Financial portfolio loans can be used for large acreages and income-producing properties: two things traditional lenders often shy away from. That’s because the team at Compeer specializes in rural lending and can offer the experience and resources needed to work with these unique properties. For the Mumm family, who were turned down for a secondary market loan from another financial lender, Compeer’s portfolio lending made it possible to get a loan on their dream home. “That’s the uniqueness we bring to the table,” McGlothlen said. 

Don’t fixate on current rates

While interest rates are top of mind for many homeowners, McGlothlen emphasized that it shouldn’t be the be-all and end-all. In other words, don’t pass up a dream property to hold out for a specific rate. “When you're purchasing a property, you’re often saying it’s a property that you want to last forever,” McGlothlen said. “The interest rate is just a product of time, and I wouldn't tell someone to wait to buy a house for a year just because they're waiting for the rates to lower.” For secondary market home loans, refinancing down the line can be an option to secure a better rate. When it comes to portfolio loans, homeowners don’t even need to take that step with Compeer. For a small fee, Compeer allows portfolio borrowers to get a new interest rate on their property when the market changes.* This benefit means they avoid a lengthy appraisal, paperwork and closing costs that can oftentimes be in the thousands. “It's really a small modification that allows you to very easily and quickly, in essence, refinance your loan for minimal fee,” McGlothlen said. 

People today have more choice and opportunity to live where they want than ever before, and for many the peace and quiet of the rural lifestyle is increasingly attractive. As a leading mortgage provider for people moving to the country, Compeer Financial has seen where the potential pitfalls lie – and we hope that by sharing some of them, you can make your own move to the rural lifestyle that much smoother.

Learn more from contributing author Chad McGlothlen and the Compeer team.

* Borrowers must be current on loan obligations to qualify.  Fees can vary by loan product.  Terms, conditions and programs are subject to change.