| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.732% | 6.826% |
| 15-year fixed | 6.571% | 6.85% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | N/A | N/A |
Thinking about buying a home in Arkansas? Navigating the home buying process can be confusing and you’ll likely have questions along the way. When it comes to financing, it’s important to understand mortgage rates so you can pick the right lender.
We’ll walk you through how mortgage rates can impact your financial future in this guide so you can find the right mortgage company for your Arkansas home.
The Best Mortgage Lenders in Arkansas:
- Best Overall in Arkansas: Rocket Mortgage®
- Best for Poor Credit: Simmons Bank
- Best for First Time Home Buyers: Arvest Bank
- Best for Online Experience: better.com
- Best for In-Person Experience: Chase
- Best for VA Loans: Veterans United
What is a Mortgage Rate?
Your mortgage rate refers to the interest rate on your mortgage. You’ll pay back your total home loan amount plus the interest over the duration of your mortgage. Locking in a lower rate can save you tens of thousands of dollars.
What can you do to improve your chances of locking in a low rate? There are a handful of factors involved in determining your rate that we’ll walk you through.
What Factors Impact Your Mortgage Rate?
Your mortgage rate is determined by a variety of factors that you’ll want to understand before jumping into this process. Here are the top factors lenders look at when setting your mortgage rate:
- Credit score: This is the most important factor lenders look at when setting your mortgage rate. Typically, the higher your credit score, the lower your mortgage rate. If your current credit score isn’t good, you may want to look at improving it before applying for a mortgage.
- Loan-to-value (LTV) ratio: This is the next factor lenders look at to decide if you are a risky borrower. Your LTV is the total amount you borrow versus the overall value of your home. If your home costs $200,000, for example, and you put down $20,000, you’ll need to finance the remaining $180,000. To find your LTV, you’ll need to divide the amount being financed by the home value or cost ($180,000 / $200,000). This makes your LTV 0.90 or 90%.
The lower your LTV, the lower your mortgage rate. You can decrease your LTV by putting down a larger down payment.
- Home location: The location of your home also impacts your mortgage rate. The housing market varies from city to city and fluctuates throughout the year. If your area’s housing market is strong, you can typically lock in a lower rate.
- Lender: The lender you can choose also impacts your rate. Some lenders could have low eligibility requirements but higher rates, while others might offer low rates and require high credit scores for approval.
- Mortgage type and term: The type of mortgage you choose and the length of your mortgage also impacts your rate.
Let’s take a look at some common mortgage types to give you a better sense of how they can impact your rate.
What is a Mortgage Type?
There are many types of mortgages you can choose from when financing your home. We’ll take a look at the 4 main types: conventional, FHA, USDA and VA.
Conventional Loans
The most common of home loans, conventional loans, are financed and backed by private financial institutions, like banks and credit unions. These loans have higher than market interest rates but may have more flexible eligibility requirements. Rates are often higher because they are not backed by the government. Instead, banks look at your LTV and credit score to determine if you’re a risky borrower.
If you put less than 20% down on your home, you’ll need to purchase private mortgage insurance (PMI) to protect the lender in case you default on your mortgage.
FHA Loans
Home loans financed through the Federal Housing Administration for first-time home buyers are called FHA loans. FHA loans are typically offered by most popular lenders and tend to have below-market mortgage rates.
Benefits of FHA home loans include low credit score requirements (as low as 580) and low down payment options (3.5% minimum). Similar to conventional loans, if you put less than 20% down on your home, you’ll need to purchase FHA mortgage insurance to protect the lender in case you default on your mortgage.
USDA Loans
Home loans financed through the U.S. Department of Agriculture for properties located in rural areas are called USDA loans. USDA loans can be used for homes outside of major cities that meet USDA income requirements. Many leading lenders offer these loans and typically have below-market mortgage rates.
USDA home loans offer benefits like flexible credit score requirements and alternative credit history consideration, no down payment requirement and low mortgage insurance rates. In some cases, you’ll need to purchase mortgage insurance to protect the lender in case you default on your mortgage. Not all USDA loan options require mortgage insurance.
VA Loans
VA loans are home loans financed through the U.S. Department of Veterans Affairs for current and former military members and their families. These loans are offered by many major and VA-only lenders at below-market interest rates.
Benefits include flexible credit requirements, no down payment options and no mortgage insurance requirements. You’ll need to pay a loan processing fee that is equal to 1% for your home loan value.
What is a Mortgage Term?
The length of your mortgage or loan is called your mortgage term. How long your mortgage term is can impact how much interest you’ll pay over time. We’ll look at 3 popular mortgage terms to give you a better idea of how interest rates can vary.
30-Year Fixed
Most homeowners opt for a 30-year fixed mortgage because the monthly payments are often more affordable. With a 30-year, you’ll pay a fixed monthly amount for 30 years. Since your monthly payments are spread out over a long period of time, you’ll often lock in a lower monthly payment at a higher interest rate. You’ll pay more interest over time with this term.
15-Year Fixed
The 15-year fixed mortgage is the same as the 30-year except it’s spread over half the amount of time. As a result, your monthly mortgage payments are higher, but your interest rate is lower. Not only will you pay your mortgage off faster with this option, you’ll pay less interest overall.
5/1 Adjustable Rate
The other type of mortgage term, adjustable, refers to any mortgage that does not have a fixed rate for the duration of the loan. The 5/1 adjustable-rate mortgage (ARM), locks in a rate for 5 years, after which the rate rises or falls based on the market.
ARMs make sense if you plan on making more money after the lower introductory rate period or if you think you’ll be selling your home after this amount of time.
Current Mortgage Rates in Arkansas
Are you curious about the average mortgage rates in Arkansas? Benzinga consistently reviews local mortgage data to bring you the most current information. Use this table to better understand the current average mortgage rates.
| Loan Type | Rate | APR |
|---|---|---|
| 30-year fixed | 6.732% | 6.826% |
| 15-year fixed | 6.571% | 6.85% |
| 7/1 ARM (adjustable rate) | N/A | N/A |
| 5/1 ARM (adjustable rate) | N/A | N/A |
Calculating Interest in Arkansas
Where your home is located in Arkansas will impact your home’s mortgage rate. We’ve listed the most updated average mortgage rates and home values so you can get a better idea of how much interest you can expect to pay over time.
| City | Average Home Value | Loan Term | Current Rate | Downpayment (20%) | Monthly Payment | Total Interest Paid |
|---|---|---|---|---|---|---|
| Little Rock | $141,000 | 30-year fixed | 6.842% | $28,200 | $738.53 | $153,070.80 |
| Fayetteville | $225,300 | 30-year fixed | 6.646% | $45,060 | $1,156.60 | $236,136.00 |
| Fort Smith | $114,400 | 30-year fixed | 6.842% | $22,880 | $599.20 | $124,192.00 |
| Hot Springs | $140,000 | 30-year fixed | 6.842% | $28,000 | $733.29 | $151,984.40 |
Lender Credit Score Minimums in Arkansas
Each lender has its own credit score requirements for approving your mortgage. We’ve pulled together a list of some of the top lenders in Arkansas and its credit score requirements.
| Lender | Minimum Credit Score Required |
|---|---|
| Rocket Mortgage® | 620 |
| PNC Financial | 700 |
| Chase | 620 |
| Flagstar | 620 |
| Guaranteed Rate | N/A (no minimum requirement) |
6 Best Mortgage Lenders in Arkansas
Now that you know more about mortgage rates and how they impact your home loan, you’re ready to start searching for your mortgage lender. To help, we’ve grouped 6 of the top lenders in Arkansas into categories so you can quickly find the lender that best fits your financial goals.
- Online Mortgages
1. Best Overall: Rocket Mortgage®
Owned by Quicken Loans®, Rocket Mortgage® is one of the top online lenders in Arkansas for all types of home buyers. Whether you need help walking through the mortgage process or know exactly what you’re looking for, Rocket Mortgage® can help.
With a streamlined online application and 24/7 customer support, you can get as much or as little guidance as you need. Rocket Mortgage® offers conventional, FHA, USDA and VA loans.
2. Best for Poor Credit: Simmons Bank
Simmons Bank has locations throughout Arkansas and is well known for helping local residents get approved for home financing.
It offers a variety of down payment assistance programs and has flexible credit requirements. Simmons Bank offers conventional, FHA, USDA and VA loans. Its credit score requirement is 580.
- Home Improvement Loans
3. Best for First Time Home Buyers: Arvest Bank
Arvest is a popular choice for banking in Arkansas and is also one of the top lenders for first time homebuyers in the state.
Arvest offers a large selection of mortgage options for first time buyers that includes conventional, FHA, USDA and VA loans. Its credit score requirement is 620.
- The Online Experience
4. Best for Online Experience: better.com
For a no-frills, no-hassle online application, turn to better.com. better.com offers a quick and easy online application, ideal for anyone looking for a conventional loan with a 3% down payment.
It also offers FHA loans. Loan officers do not charge commission or fees for services. Better.com credit score requirement is 620.
5. Best for In-Person Experience: Chase
If you’re looking for a lender with a variety of locations and the flexibility to apply in-person or online, Chase may be the right lender for you.
- Banking and Mortgages
Chase has a large variety of mortgage options to choose from and only requires a 3% down payment. Chase offers conventional, FHA, USDA and VA loans.
Get a quick refinance quote or purchase quote for your Arkansas home.
6. Best for VA Loans: Veterans United
If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
- Current Service Members
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
Key Considerations
Knowing how mortgage rates can impact your financial future is important when deciding which lender to work with. Although low mortgage rates could save you tens of thousands over time, finding a lender who offers lower monthly payments at a higher interest rate might be better for your budget.
Consider how down payment, credit score, LTV and other factors impact your mortgage rate, then partner with a mortgage company that offers the incentives most important to you.
Frequently Asked Questions
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!
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.
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.