In August the 30-year fixed rate averaged about 6.67%, by C.A.R.'s calculation from Freddie Mac data. On October 8, Freddie Mac's survey put it at 7.40%. That move matters more than it sounds.
What a higher rate does to your letter
On the same loan amount, principal and interest at 7.40% is roughly 7.5% higher each month than at 6.67%. Put the other way, if your budget for the monthly payment stays the same, you can borrow roughly 7% less. A pre-approval written in August may now overstate your price range, and a seller's agent will notice a stale date.
When to refresh it
- Before every offer. I can issue a letter for each offer, matched to the price, so you don't show your ceiling.
- When rates move a quarter point or more since your letter.
- When something changes on your side: a new job, a big purchase, a change in your down-payment funds.
If the new numbers come in lower
- Ask for a buydown. A seller credit can pay for a temporary or permanent rate buydown, and in a slower market sellers are often open to it.
- Compare loan types. An adjustable-rate loan, a different term or a different program can change the picture.
- Investors: recheck the DSCR. A higher rate raises the payment, which lowers the debt service coverage ratio on a DSCR loan.
Refreshing a pre-approval is quick when your documents are already on file. Start or refresh your pre-approval, for a home in Georgia or California.
