| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.255% | 6.346% |
| 15-year fixed | 6.295% | 6.465% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | 6.25% | 7.3% |
North Carolina provides access to just about everything you could need, from beaches to mountains, big cities and small towns. You can save money by comparing home prices in various North Carolina cities. But you can also save if you’re a savvy consumer and actively search for the best mortgage rates in North Carolina.
The Best Mortgage Lenders in North Carolina are:
- CapCenter: Best Overall in North Carolina
- Rocket Mortgage®: Best for Quick Service
- Truist: Best for In-Person Service
- Cardinal Financial Company: Best Customer Service
- Carolina Home Mortgage: Best for FHA Loans
- Veterans United: Best for VA Loans
- CrossCountry Mortgage: Best for Self-Employed in NC
What is a Mortgage Rate?
There’s a cost associated with borrowing money to buy a house. That cost is called interest, and lenders individually set the rates that they charge. One way to make sure you’re getting the best rate on the loan you’re taking out is to research rates before you get an official purchase quote from a lender. That will give you the market information you need to determine whether the lender truly is offering you a competitive rate.
What Factors Impact Your Mortgage Rate?
No two people will be quoted the same interest rate. A lender may stay within a particular range but your quote will also be influenced by factors unique to you. Here are some top factors that influence the interest rate you’ll pay on your home purchase.
- Your history: The best mortgage companies may want your business, but they also want to reduce their risk. To do this, they’ll pull your credit report and review your credit history. A strong score can get you a lower interest rate.
- Your investment in the purchase: You’re asking a lender to let you borrow a lot of money for the foreseeable future — so you need to pitch in, too. You’ll need to deposit a small percentage of the total purchase price, known as a down payment. The higher that down payment is, the more likely you are to get a good deal on a mortgage rate.
- The type of home you’re after: The type of home you’re buying, as well as its location, can influence the rate you pay. Mortgage rates vary from one state to the next. You’ll also get a better rate if you’re buying a home to serve as your primary residence versus a home you’re buying as a vacation home or rental property.
- Price of your home: The more you borrow, the bigger the risk you are to the lender. Let’s say you’re buying a house close to $1 million — you might have to get a special type of conventional loan called a jumbo loan. That type of loan will come with a higher interest rate because of its increased risk to the lender.
- Type of lender: You have a wide range of mortgage lender options in North Carolina. You can go with a large, corporate lender with branches in every city, but this can sometimes lead to higher interest rates. You may save money by choosing a small credit union or local bank that strives to be competitive when setting rates.
- The economy: Lenders are well aware of the economic environment, both on a local and national scale. Lenders may increase rates if the economy is strong and demand is high for mortgages. During tough times, those rates could pitch downward to stimulate buying.
What is a Mortgage Type?
You can control the rate you pay somewhat by choosing the right type of mortgage. There are 4 major options:
Conventional Loans
Typically, interest rates on a conventional loan are higher compared to government-backed loans. This is because a conventional loan is between you and the lender, with no government insurance behind it. However, if you have a strong credit score and are willing to put at least 20% down, you can save on the private insurance premiums you’d have to pay with a loan that doesn’t have that down payment applied to it.
FHA Loans
The government backs loans through the Federal Housing Administration. This backing allows lenders to offer FHA loans with lower interest rates and accept borrowers with lower credit scores.
USDA Loans
USDA loans are backed by the U.S. Department of Agriculture and cover homes that are purchased in areas where the government wants to stimulate the market. You can check those areas on the USDA’s map.
VA Loans
The government backs loans to veterans and military members through the Veterans Administration in appreciation of their service. You’ll also get a lower interest rate on these loans if you qualify and you’re also not required to make a down payment.
What is a Mortgage Term?
Your loan won’t be forever. The mortgage rates North Carolina homebuyers pay depend in part on the length of time you agree to take to repay your loan. Here are a few common mortgage terms you’ll want to know:
- 30-year fixed: This type of loan spreads your payments over a full 30 years. However, lenders will charge you a higher interest rate to compensate for the increased length of time.
- 15-year fixed: You’ll pay a fixed interest rate for 15 years with a 15-year fixed loan. This loan has a faster repayment period and your monthly payments will be higher. Your interest rates will be lower.
- 5/1 ARM: Consider an adjustable rate if you’re interested in starting out with a lower monthly payment. A 5/1 ARM locks your interest rate in for the first 5 years. At the end of that period, your rate will scale to the current interest rate.
Current Mortgage Rates in North Carolina
Buying in North Carolina means you’ll have a wide range of lender options — even if you’re a first-time buyer. Lenders individually set their rates, but they base them on the market. Here are the current rates for North Carolina. These can change from one day to the next, especially if the economy is turbulent. We make every effort to keep the rates as up-to-date as possible.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.255% | 6.346% |
| 15-year fixed | 6.295% | 6.465% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | 6.25% | 7.3% |
Calculating Interest in NC
Lenders calculate interest based on how much you owe as you make each payment. A large part of your payment will go toward interest. In the early days of your mortgage, you’ll still owe the full amount you borrowed at that point. As that base amount, known as the principal, reduces, you’ll pay more on it and less in interest. Here’s an example of how much you’ll pay in interest based on various principal amounts.
| City | Average Home Value | Loan Term | Current Rate | Downpayment (20%) | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|---|---|
| Charlotte | $229,100 | 30-year fixed | 6.527% | $45,820 | $1,161.71 | $234,935.60 |
| Raleigh | $278,400 | 30-year fixed | 6.527% | $55,680 | $1,411.70 | $285,492.00 |
| Greensboro | $147,400 | 30-year fixed | 5.989% | $29,480 | $706.16 | $136,297.60 |
| Durham | $230,900 | 30-year fixed | 6.527% | $46,180 | $1,170.84 | $236,782.40 |
Lender Credit Score Minimums in NC
Your lender will look up your credit score when you purchase a home or get a refinance quote. That number will not only influence whether your loan is approved or not, but it will also factor into the rate you’re quoted. You’ll at least need a rate in the 600s to get a conventional loan.
The higher the number, the higher the likelihood you’ll get a lower mortgage rate. You may qualify for a government-backed option like an FHA loan if your score falls in the 500s.
| Lender | Minimum Credit Score Required |
|---|---|
| Figure Home Equity | 600 |
| Discover Home Equity | 620 |
| Better.com | 620 |
| Alliant Credit Union | 620 |
| USAA Bank | 620 |
7 Best Mortgage Lenders in North Carolina
Buying a home is easier when you have a handy list. We’ve pulled together our own list of the best 5 lenders in North Carolina to help you get started on your mortgage search.
- Zero Closing Costs
1. Best Overall in North Carolina: CapCenter
When you want the best combination of service and support for the entire home-buying or refinancing process, CapCenter is what you need. This company is more than a mortgage broker—it also offers realty services to help you either find a home or sell.
You pay 0 closing costs when you buy or refinance, and the entire process is handled by the same company from start to finish. Plus, home sellers only pay a 1% listing fee.
- Online Mortgages
2. Best for Quick Service: Rocket Mortgage®
Looking for a fast, convenient solution? Rocket Mortgage® should be on your radar.
Not only does Rocket Mortgage® offer competitive interest rates, it also guides you through the process online.
You choose the location and time for your meeting when you close.
- First-Time Homebuyers
3. Best for In-Person Service: Truist
Truist has a solid presence across North Carolina — it’s likely you’ll find a branch near you.
You can use its online calculator to estimate how much your online payment will be.
Once you’ve worked out a rate, stop by a local branch to meet with a representative in person. You can also apply online as well.
- Matching Loans to Your Situation
4. Best for Customer Service: Cardinal Financial Company
Cardinal Financial is worth considering whether this is your first mortgage or you’re a longtime homeowner.
You’ll be assigned a loan officer to guide you through the process, but the lender’s portal makes it easy to handle all the paperwork.
You can also use Cardinal’s tool to find a real estate agent and determine the best type of loan to fit your unique situation.
- North Carolina Home Buyers
5. Best for FHA Loans: Carolina Home Mortgage
Carolina Home Mortgage offers a variety of loan options, including FHA loans.
Branches are available in Chapel Hill, Fayetteville and Pittsboro to give you in-person service if you prefer.
You can prequalify to find out how much you can spend on a home before you start your real estate search.
- Current Service Members
6. Best for VA Loans: Veterans United
Consider Veterans United if you’re a qualifying military vet or personnel.
Veterans United’s branches in Fayetteville and Jacksonville offer one-on-one consultations for the VA loan process.
Veterans United specializes in VA loans, including in-house military advisors, which ensures you’ll get the right level of expertise for your loan.
- Self-employed Borrowers
7. CrossCountry Mortgage: Best for Self-Employed
CrossCountry Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. CrossCountry Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.
It's also easier to get approved if you're self-employed. Tax returns are not required and you'll only need one year of self-employment income history and a minimum credit score of 580. CrossCountry Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.
North Carolina Home Ownership
Buying a home is always exciting — especially when you live in a beautiful state like North Carolina. Why not make your dream home even dreamier by getting a great deal on your mortgage rate? Check out our list and make it happen.
Frequently Asked Questions
1) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
2) Q: How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.