Current Mortgage Rates in Connecticut

Are you considering buying a home in the Constitution State this year? You probably have a lot of questions about the buying process. One of the first steps you’ll take is finding the right financing for your home, which includes researching mortgage rates and lenders. We’ve created this guide to help you navigate through the financing process with ease, so you’ll find the best mortgage lender to meet your financial needs.

Best Mortgage Lenders in Your State

What is a Mortgage Rate?

Your mortgage rate, or interest rate, refers to the percentage of interest you’ll pay back on top of the initial mortgage amount. If you take out a $300,000 mortgage, for instance, you’ll be responsible for paying back the full $300,000, plus interest.

You’ll want to find the lowest rate possible since this typically means you’ll pay the least amount of interest. Different factors can impact your mortgage rate, including mortgage terms and mortgage types.

Let’s take a deeper dive into some of the main drivers lenders use to determine your mortgage rate.

What Factors Impact Your Mortgage Rate?

Many factors can impact your mortgage rate, but understanding these different drivers is important to securing the lowest possible rate. Here are some of the most typical factors:

• Credit score: If you’re looking to buy a home, it’s imperative that you know your current credit score. This score and your credit history is one of the top factors lenders look at when determining your mortgage rate. Lower scores alert lenders that you might not manage debt well and can lead to them protecting their assets by assigning higher interest rates. 
• Loan-to-value ratio: Also known as LTV, your loan-to-value ratio is the amount of money you’ll borrow divided by the total value of your home. LTVs help lenders determine how risky your mortgage is. The higher your LTV, the more likely you are to receive a high mortgage rate.

An example LTV formula would be $250,000 (mortgage amount) divided by $300,000 (home value), giving you an LTV of 83.3%. You can lower your LTV and, in turn, your mortgage rate by putting down a larger down payment.

• Lender: Different lenders have different criteria for mortgage rates. A lender might be well known for low rates but have high credit score requirements. Likewise, another lender might have high rates but low criteria for approval. It’s best to compare lenders to make the best decision for your situation.
• Location: The location of your home also determines how high or low your mortgage will be. The market’s health dictates how mortgage rates rise and fall. If the market is strong, expect lower rates. If weak, expect higher rates.

The local market in Connecticut is currently hot, with home values on the rise. This means you’re more likely to lock in low rates.

• Mortgage type and term: The last critical factors that impact your mortgage rate are mortgage type and term. Lenders offer a variety of different mortgage types, all with different rates. The length of your mortgage can also impact your rate.

Let’s explore different mortgage types and learn how they can affect your rate.

What is a Mortgage Type?

There are several different mortgage types you should be aware of when applying for a loan: Conventional, FHA, VA and USDA. Find out more about the pros and cons of these mortgages below.

• Conventional: Also known as a traditional mortgage, conventional mortgages are funded by banks and credit unions and are not backed by the government. As a result, they’re considered slightly riskier than government-funded loans and tend to have higher mortgage rates. They also often have more flexible credit requirements.
• FHA: Known as the first-time buyer loan, FHA loans are funded by the government through the Federal Housing Administration. FHA loans have low rates and small down payment requirements (minimum of 3% down). They also offer low credit score requirements (minimum of 580). You’ll need to purchase monthly mortgage insurance if your down payment is less than 20%.
• VA: This loan is ideal for current or former members of the military and their family members. VA loans are funded by the government through the Department of Veterans Affairs and offer some of the lowest mortgage rates and requirements on the market. There is no down payment requirement on some VA loans and no need to purchase mortgage insurance. You’ll need to pay an origination fee, which is typically 1% of the loan amount.
• USDA: This type of mortgage is funded by the government through the U.S. Department of Agriculture. USDA loans can be used on homes in rural locations (you can see if you address qualifies online). USDA loans have flexible credit requirements and offer no down payment options.

What is a Mortgage Term?

A mortgage term refers to the length of time of your loan. Mortgage terms impact your mortgage rate. Let’s look at 3 common mortgage terms to find out how they can alter rates.

• 30-year fixed: This term means that you’ll pay a fixed rate and amount over 30 years. Since this mortgage term is so long, you’ll pay more interest in the end, but experience lower monthly payments. 
• 15-year fixed: This term means that you’ll pay a fixed rate and amount over 15 years. Since this mortgage term is half of the 30-year fixed term, you’ll pay higher monthly payments, but less interest over the lifetime of your loan.
• 5/1 ARM: An ARM refers to an adjustable-rate mortgage, which are home loans without fixed rates. The 5/1 ARM term refers to a mortgage where you’ll pay the same introductory rate for 5 years, then different rates over the remaining duration of the loan. The rates you’ll pay after the introductory period are determined by the market and you’ll typically end up paying the most amount of interest with ARMs. This is a good option if you plan on selling your home after 5 years.

Current Mortgage Rates in Connecticut

Understanding the current mortgage rates in the state can help you set better financial expectations for your home loan. While the local market can fluctuate throughout the year, Benzinga consistently looks at local market data to bring you the most current rate information.

Calculating Interest in Connecticut

Figuring out how much interest you’ll pay over the lifetime of your mortgage can help you better plan your budget. While you won’t know the exact number to plan for until you select a lender, Benzinga has compiled Connecticut’s average home values and rates so you’ll have a more educated idea about how much you’re likely to spend.

Lender Credit Score Minimums in Connecticut

Each lender has its own credit score requirements and may have different requirements for different mortgage products. Below is a list of the minimum credit scores required from 5 of Connecticut’s top mortgage lenders.

Get the Best Rates in Connecticut

To get the best rates in Connecticut, you’ll need to understand how your spending habits and the local market impact lender rates. Know your credit score and work on improving your credit and saving more money for a down payment to improve your chances of securing a low rate. You should also lean on your real estate agent as a key resource during the mortgage application process.