Top Tips to Combat Rising Mortgage Rates: Stay Ahead in 2024!

It's fair to say that 2023 was the year of rising mortgage rates. And 2024 may not end up too different. As of late October, the average 30-year mortgage rate was a whopping 7.79%, as per Freddie Mac. Ouch. With rates like that, you might assume that buying a home is out of the question in 2024.

But it doesn't have to be. Here's how you can get ahead of soaring rates and fulfill your homeownership dream.

1. Boost your credit score

These days, even borrowers with great credit are getting stuck with higher mortgage rates than they want. But still, the more you're able to boost your credit score, the more competitive rate a mortgage lender is likely to give you -- even at a time when borrowing rates are high.

There are a few different steps you can take to boost your credit score. First, make an effort to pay all of your bills on time. Secondly, if possible, pay down some credit card debt to lower your credit utilization ratio. And finally, check your credit report carefully for errors and report mistakes you see that reflect poorly on you.

2. Save up a larger down payment

The more money you're able to put down on your home, the less expensive a mortgage you'll need to sign. That's a good thing at a time when it's expensive to borrow. That said, one thing you don't want to do is make such a large down payment that you're leaving yourself with a minimal emergency fund.

Homes have a tendency to need repairs. And you may want to make certain fixes right away upon moving in. So if you have extra cash, it could work to your benefit to put it toward your down payment. But make sure you still have an emergency fund with enough money to cover three full months of essential bills at a minimum, and more if you know going into your home purchase that there are big repairs to tackle.

3. Buy a less expensive home

In September, the median existing home sold for $394,300, says the National Association of Realtors. But if you're willing to buy a smaller home or one that's not so updated, you might end up with a much lower purchase price. The result? A smaller mortgage and lower ongoing payments.

You can also consider expanding your search to neighborhoods that are up and coming, as opposed to those that are already very built up. This isn't to say that you should move to a neighborhood that lacks the resources you need. Rather, consider one that has decent amenities plus different projects in the works that, in a year or two, could change the face of the neighborhood significantly.

4. Consider a tiny home

You may not want to put off homeownership just because mortgage rates are sky high. But what if you could buy a home without having to take out a mortgage at all? If you're willing to purchase a tiny home, it may be possible.

Tiny homes are usually between 100 and 400 square feet, and Rocket Mortgage says the average cost of one is between $30,000 and $60,000. At that price, you may be able to purchase a home outright and avoid having to borrow.

Today's mortgage rates are certainly making things tough for would-be buyers. But that doesn't mean you can't achieve your goal of becoming a homeowner in 2024. Plus, you never know -- rates could start to fall as the new year moves along. So don't give up hope!