The Federal Reserve has begun to lower high interest rates. This is good news for those who are thinking of buying a home because at least the cost of mortgages will continue to trend downwards. The Fed's decisions are one of the factors that affect the interest rates on these loans. In fact, to have a better estimate of where the costs of this 30-year debt are going, you have to follow the yield on the 10-year Treasury bond and add 1.5% or 2%. Analysts expect mortgage rates to stay below 6% over the next few months. Although they will be far from the 3% they were at at the start of the pandemic, some of the problems of a market in which high credit costs are coupled with a serious lack of supply can begin to ease. With few homes on the market, prices are at record highs. But if you find the house of your dreams or a home that is priced right, the credit landscape will help you in the coming months. In the meantime, take the time to prepare your finances before committing to what is usually the most important loan for households. Here is the list of things you need to do: 1. Make sure you have or maintain a high credit rating. If you apply for credit with your partner, both of you should have the highest rating possible because it depends not only on whether the bank grants you credit, but also on what rates. The rating reveals the risk that a client poses to a creditor and the higher it is, the less chance of default the bank will see and the better credit conditions you will get. In the event that your credit rating is not high enough, work on improving it and request a credit report from Experian, TransUnion or Equifax to correct errors if there are any. 2. Reduce your previous debts. The bank will review what you owe in relation to what you earn, to decide if you can take on more debt. This ratio is a percentage that should remain below 40% to 42%. If you're way over the limit, spend the next few months trying to get it down by paying off personal loans, student loans, credit card loans, etc. 3. Make a budget and study what type of loan is best for you. Knowing how much you can afford is a step you need to take before you start looking for a home. It's a little late if you already know your dream home, but in that case it's a good idea to get your feet on the ground before the bank does the math for you. As for the types of loans, there are many with different terms and they depend largely on the amount of down payment you have available, among other circumstances. It's good to compare credit options at different banks. 4. Save for the down payment on the house and the closing costs of the mortgage. These are the sums that cost the most to make. The first depends on the cost of the house — know that you don't need 20% — and the second is usually between 2% and 6% of the total mortgage. Many lenders are offering financial assistance to help make these payments or the closing payment, and you can apply for other assistance from local and state institutions. Check out Fannie Mae and Freddie Mac's HomePath, Home Possible and HomeReady programs, as well as any that your state may offer. The closing price can be included in the mortgage, but it increases the amount you owe and you have to pay interest on it. 5. Once you have all of the above under control, go out and look for your dream home.