Delaware Mortgage & Refinancing

Last Updated on June 3, 2017 by Andrew Lee

Delaware residents and visitors alike have plenty of things to do and enjoy. From the state’s majestic natural sights to its many entertainment options, it’s no wonder many choose to remain here. (Source: Livability.com)

To name some of its best cities, there’s the capital Dover, as well as Middletown and New Castle. Although cost of living is generally higher than the national average, the booming agriculture, government service, pharmaceutical, and banking industries contributing to high employment rate make up for it while also making it attractive for home buyers. (Source: Sperling’s Best Places)

Status of Home Loan Lending

On average, homes in The First State have a value of $214,800, representing an increase of 2.6% from the previous year. (Source: Zillow)

Currently, the average mortgage interest rate comes close to the national average. Of course, individual rates will still depend on many different factors, including the borrower’s credit score rating, amount of loan, chosen term (length of time to repay the debt), and down payment. This is why comparing offers play an integral role in keeping costs at a minimum.

When a Fixed-Rate Mortgage Makes for a Better Option

In many parts of the United States, borrowers remain in favor of the 30-year fixed rate mortgage, and for several good reasons. First is the security that the unchangeable interest rate provides. Since this type of mortgage has a locked-in rate, borrowers can predict their monthly payments more accurately.

They also don’t have to worry about finding themselves in a financial pinch when the market tumbles, since their interest rate will remain unaffected. And because they have 30 years to repay their debt, they can expect the lowest possible monthly payments.

A Good Time to Go for an Adjustable-Rate Mortgage

The adjustable-rate mortgage, also known as variable-rate, is usually a better option for those who don’t have plans of staying in the same house for a long time. The most obvious difference between ARM and fixed-rate mortgage is that the former’s interest rate can change depending on the movement of the market. If the market performs well, ARM borrowers can enjoy lower interest rates. Additionally, lenders offer their ARM products with introductory rates much lower than those associated with the fixed-rate ones.

The introductory rates only last for a specified amount of time (usually one, three, or five years). Once over, home owners who have this type of mortgage can expect their interest rate to change based on market movement. In general though, the change usually means a higher rate.

Assistance with Buying or Holding On to a House

Home financing is available to Delaware residents. For first time home buyers, the Delaware State Housing Authority offers programs that can help them make their purchase. The agency also gives mortgage counselling and even financial aid for home repairs. The state’s Neighborhood Stabilization Program is a good source of homes for sale on the more affordable side.

The United States Department of Agriculture (USDA) and Home Affordable Refinance Program (HARP) can also help low to moderate income home buyers.

Advice for All Borrowers

All lenders carefully consider an applicant’s credit score rating. The higher an individual’s FICO score, the better the interest rate he/she will receive. Lenders use a scoring model consisting of rating classifications. Borrowers with a score of 800 (or higher) can expect the lowest possible interest rates, while those with a score of 579 (or lower) usually don’t qualify for a mortgage. A score between 580 and 669 can also mean difficulties qualifying or having really high interest rates.

Fortunately, there are several ways to improve credit score, and successfully implementing this will make it easier to secure a mortgage with better rates.

References:

Delaware State Housing Authority: http://www.destatehousing.com/

Experian: http://www.experian.com/blogs/ask-experian/infographic-what-are-the-different-scoring-ranges/

USDA Rural Development – Single family loans: http://www.rd.usda.gov/programs-services/all-programs/single-family-housing-programs

Home Affordable Refinance Program: http://www.harp.gov/