Today's mortgage and refinance rates in Connecticut

Buying a home in Connecticut

According to Zillow, the typical home value in Connecticut is a little higher than the US national typical value of $259,906. The typical home value in Connecticut is $272,404, and Zillow expects the value to increase to $292,000 by September 2021.

First-time homebuyer programs in Connecticut

The Connecticut Housing Finance Authority offers several financial assistance programs, including the following:

  • The HFA Advantage and HFA Preferred Loan Programs: Get a loan with reduced mortgage insurance costs, and you'll stop paying private mortgage insurance when you gain 20% equity in your home. (Some lenders in the US make you wait until you have 22%, but these loans let you off the hook at the 20% mark.) The HFA Preferred program is available for multi-family homes, but the HFA Advantage program is just for single-family homes.
  • Conventional Area Median Income Loan program: If you have a low-to-moderate income, you can buy a home with no upfront mortgage insurance costs and discounted monthly insurance costs. The CHFA will cancel your mortgage insurance when you reach 20% equity in your home.
  • Down Payment Assistance Program loan: You must borrow at least $3,000, but you can't borrow more than the minimum down payment for your home.
  • Reduced interest rates: You can get a rate discount as a military service member/veteran, teacher, or police employee. You can also get lower rates if you have certain disabilities or are a resident of public housing. You can combine these low interest rates with down payment assistance.
  • FHA 203(k) Renovation Mortgage Program: Get a low interest rate on a loan that wraps up the cost of home repairs into your mortgage.
  • Mobile Manufactured Home Loan program: If you are buying a mobile home or manufactured home, you can get a low interest rate and reduced closing costs.

The Housing Development Fund offers down payment assistance for residents of Washington, Connecticut. Receive a no-interest loan for up to $10,000, and pay it back over 30 years.

Historic mortgage rates for Connecticut

By looking at the average mortgage rates in Connecticut since 2010, you can see trends for 30-year fixed mortgages, 15-year fixed mortgages, and 5/1 adjustable mortgages:

Seeing how today's rates compare to historic Connecticut mortgage rates may help you decide whether you'd be getting a good deal by getting a mortgage or refinancing now.

30-year fixed rates

You'll pay a higher interest rate on a 30-year fixed mortgage than on a shorter-term fixed-rate mortgage. The 30-year fixed rates used to be higher than adjustable rates, but recently 30-year terms have been the better deal.

Monthly payments are relatively low for a 30-year term, because you're spreading payments out over a longer period of time than you would with a shorter term.

You'll ultimately pay more in interest with a 30-year term than you would for a 15-year mortgage, because a) the rate is higher, and b) you'll be paying interest for longer.

15-year fixed rates

You'll pay less on a 15-year mortgage than on a 30-year loan, for two reasons: 15-year fixed rates are lower, and you'll pay off the mortgage in half the time.

Your monthly payments will be higher on a 15-year mortgage, though. You're paying off the same loan principal in a shorter amount of time, so you'll pay more each month.

Adjustable rates

With an adjustable-rate loan, your rate stays the same for the first few years, then changes periodically. For example, your rate is locked in for the first five years on a 5/1 ARM, then your rate increases or decreases once per year.

ARM rates are at all-time lows right now, but a fixed-rate mortgage is still the better deal. The 30-year fixed rates are comparable to or lower than ARM rates. It could be in your best interest to lock in a low rate with a 30-year or 15-year fixed-rate mortgage rather than risk your rate increasing later with an ARM.

If you're considering an ARM, you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.

Refinancing your mortgage in Connecticut

Rates are at historic lows right now, so it could be worth it to switch your current mortgage for one with a lower rate — especially if the new rate would be significantly lower.

You don't necessarily need to refinance with the same lender you used for your initial mortgage. A different company may offer you a better deal this time around. Shop around for a lender who will offer the lowest rate based on your credit score and debt-to-income ratio, and the one that charges relatively low fees.

How to get a low interest rate on your mortgage

Here are some tips for landing a good interest rate on your mortgage:

  • Save for a down payment. With a conventional loan, you may be able to put down as little as 3%. But the higher your down payment, the lower your rate will likely be. Rates should stay low for a while, so you probably have time to save more.
  • Increase your credit score. Many lenders require a minimum credit score of 620 to receive a mortgage. But the higher your score, the better your rate will be. To improve your credit score, be sure to pay all your bills on time. You can also pay down debts or let your credit age.
  • Lower your debt-to-income ratio. Your DTI is the amount you pay toward debts each month, divided by your gross monthly income. Most lenders want to see a DTI of 36% or less, but an even lower DTI can result in a better rate. To improve your DTI, pay down debts or consider opportunities to increase your income.
  • Choose a USDA or VA loan. If you're eligible, you might consider a USDA loan (for low-to-moderate income borrowers buying in a rural area) or a VA loan (for military members and veterans). These mortgages typically come with lower interest rates than conventional or FHA loans. As an added bonus, you won't need a down payment.

Improving your financial situation and choosing the right type of mortgage for your needs can help you get the best interest rate possible.

Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.

Source: Read Full Article