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4 Tips on Snagging a Lower Interest Rate Mortgage

Updated: May 27, 2025

A common and unfavorable theme for homeowners is a high-interest rate mortgage. Mortgage rates fluctuate, so it’s easy to end up with a high rate, but you don’t have to stay stuck in one. We’ve outlined a few steps on how to snag a lower-interest-rate mortgage.

1. Improve Your Credit Score

Your credit score is one of the most important factors lenders use to determine your mortgage interest rate. The higher your score, the lower the risk you present to lenders, and the better the rate you’re likely to receive. Even a small improvement in your score could make a significant difference in the long-term cost of your mortgage.

To boost your credit score, start by paying all your bills on time, keeping credit card balances low, avoiding new debt before applying, and regularly reviewing your credit report for errors. It’s also wise to avoid closing old credit accounts, as the length of your credit history plays a role in your score.

Credit score
credit cards

2. Don’t Apply For New Credit

When you’re preparing to refinance your mortgage, it’s important to keep your credit profile as stable as possible — and that means avoiding any new credit applications. Applying for new credit cards, auto loans, or personal loans can temporarily lower your credit score and signal increased financial risk to lenders.

Each time you apply for credit, a hard inquiry is made on your credit report, which can cause a slight dip in your score. More importantly, new credit accounts reduce the average age of your credit history and increase your overall debt load, both of which are factors that mortgage lenders closely evaluate when determining your interest rate.

Lenders want to see that you’re financially responsible and not taking on new obligations right before (or during) the refinancing process. So, to give yourself the best shot at qualifying for the lowest possible rate, hold off on any new credit applications until after your refinance is complete.

3. Don’t Change Jobs

Lenders want to see a consistent employment history because it demonstrates reliable income — a key factor in your ability to repay the loan. At Launch Credit Union, for example, we typically require a minimum of two years of steady employment history as part of our income verification process.

Changing jobs just before or during your refinance can raise red flags for underwriters. Even if you’re moving to a higher-paying position, a job change can delay the process or result in additional documentation being required — such as offer letters, pay stubs, or even a waiting period to establish income consistency. If your new job is in a different industry or has variable income (like commission-based or self-employment), it can complicate matters even further.

To avoid unnecessary delays or complications, it’s best to hold off on any career changes until your refinance is finalized. Lenders are looking for stability, and maintaining consistent employment helps improve your chances of securing a lower interest rate.

employment
signing a document

4. Don’t Cosign on a Loan

Cosigning for someone else’s loan, whether it’s a car loan, personal loan, student loan, or even a lease, can negatively impact your ability to secure a low interest rate.

When you cosign, you’re legally agreeing to take responsibility for the debt if the primary borrower fails to pay. Even if the person you cosigned for makes every payment on time, lenders still view the loan as part of your financial obligations. This added liability can increase your debt-to-income (DTI) ratio, making you appear riskier in the eyes of mortgage underwriters.

 

These tips will start you on the right path to snag a lower-interest-rate mortgage. If you’ve checked these tips off your list and you’re ready to refinance, let Launch help. Here at Launch, we don’t sell your loans, we will always service your loans. Another great benefit of refinancing with Launch is being able to visit any of our branches and receive on-the-spot help regarding your mortgage. You’ll talk with a Member Service Representative and then you’ll be connected with a home loan specialist who can make sure you’re fitted with the right loan. Launch will be with you every step of the way.

You can apply online or stop into one of our Launch branches to talk with a Launch Member Service Representative about the mortgage refinancing process.

For more information on Mortgages, click HERE.

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