Last Updated on September 17, 2020 by Andrew Lee
Connecticut is famed for having the greatest per-capita income in the entire United States, with it having a superiorly diverse economy consisting of major sectors like insurance, finance, technology, and agriculture. It also has an exceptional education system, with the internationally-acclaimed Yale University calling it home. (Source: Livability.com)
All these, plus the high employment rate, natural beauty, and all the other great features of the state make it highly attractive to home buyers, despite its overall cost of living placing higher than the national average (Source: Sperling’s Best Places). Some of the top-ranking cities here include Stamford, Greenwich, and New Haven.
A Good Time to Buy a Home: Now vs. Waiting
From 2014 to 2015, The Constitution State has enjoyed a reduction of 0.25% in its mortgage rate average. 2016 rates also followed the downward trend, with the year’s average lower than the previous year. (Source: SmartAsset)
However, experts forecast that borrowers may likely see a spike in the rates this 2017. This is one reason they recommend buyers who can already afford to buy to push through with their purchase. On the other hand, waiting might be a better option for those who need to make a 20% down payment, since this reduces their odds of having to purchase mortgage insurance, which can considerably increase their home loan expenditures.
How Affordable Home in the State Are
CT real estate is more expensive than the national average of $186,100, with it having a median home value of $243,300. (Source: Zillow)
Single-family homes, which comprise 86.60% of all residential dwellings in the state, have an average property value of $196,531.05. Condominiums, which account for 12.60% of the housing market, go for an average value of $92,314.53. The value of PUD homes average at $200,607.11, while townhomes fetch an average value of $85,758.89.
Fixed- vs. Variable-Rate Mortgage
Borrowers have two options when it comes to home loans: the fixed-rate and the variable-rate mortgage. Understanding the risks and benefits that both come with can help consumers make the right decision.
As the term suggests, fixed-rate mortgages have locked-in interest rates. This means the interest won’t change, no matter what happens to the market. It gives homeowners the security and protection against sudden changes in their monthly payments. These features make it attractive for those who want to stay in their home for their entire lifetime, or in the long run. However, the non-changeable rate means that borrowers can’t enjoy lower rates in the future.
Variable-rate (or adjustable-rate) mortgages offer borrowers the chance to enjoy initial lower monthly payments since it comes with interest rates lower than those of a fixed-rate mortgage for a pre-specified period of time (known as a “teaser rate”). Consumers who intend to stay in the house for only five years or so (or those who can pay off the entire loan on or before the end of the teaser rate) may find this more appropriate for their needs. It does come with a risk though, which is the sudden – and typically considerable interest rate increase after the initial lower-rate period.
Help from the Government
Homebuyers needing assistance for mortgage-related concerns can rely on several state agencies, such as the Connecticut Housing Finance Authority (CHFA).
The CHFA offers help for both first-time buyers – even those at risk of foreclosing – and existing homeowners. This organization works with lending institutions so that eligible mortgage applicants can secure a house at a more affordable cost. It also offers programs aimed to help educate buyers on the process of pre-purchasing and pre-closing.
For those facing possible foreclosure, the Connecticut Association for Community Action (CAFCA) can help. It has programs focused on mortgage payment services, preventing eviction, and even emergency rentals.