Kentucky Mortgage & Refinancing

Although internationally-acclaimed for its bourbon distilleries, there is more to Kentucky that keeps it residents loving it and attracting visitors. It boasts of plenty of natural resources, diverse culture, rich history, quality education, and beautiful cities, including Louisville, Lexington, and Danville. (Source:

Add to this the low cost of living in the state, and it’s easy to see why the state regularly sees more than its fair share of prospective home buyers. (Source: Sperling’s Best Places)

A Then and Now Look at Home Lending in the State

In 2014, The Bluegrass State had mortgage rates averaging a little higher than that of the country, at 4.18% vs. 4.13%. In 2015, it dropped to 3.85%, resulting in a lower-than-national average. Currently, rates follow this trend. However, home buyers can still expect real estate to cost less than the rest of the country. The median home value in the state is $133,700, compared with the national median of $195,300. (Source: Zillow)

Home Buyer Considerations

Deciding on whether to make the big step towards home ownership takes a lot of careful planning and preparation. Those already considering to make the purchase should first establish their financial capability so they can determine whether or not they can repay their debts without problems. Additionally, they should also have enough money saved for a down payment, which is usually 20% of the total selling price of the house. There’s also the different types of housing loans available in the state, which they should know the differences of.

Affordability of Homes in the State

As mentioned above, the average value of real estate in KY is lower compared to many other states. Single-family homes, consisting of 94.50% of the housing market, are valued on average, $94,495.42. Condominiums (3.80% of all residential properties) have an average value of $100,262.35. PUD homes, on average, are valued at $116,513.46, while townhomes are at $75,981.67.  

Fixed-Rate Mortgages and Adjustable-Rate Mortgages: The Key Differences

Borrowers in the state can choose between two main types of mortgages: a fixed-rate and an adjustable-rate (also called variable-rate) mortgage. Consumers should base their decision on their own personal short- and long-term needs, as well as their current and future housing requirements and financial capabilities. Below are the key differences between these two housing loans.

    • Interest Rates: The interest rate is the biggest difference between the two. Those of fixed-rate mortgages, although higher than the initial rate associated with ARMs, don’t change, even if the market falls (or improves).
    • Average Interest Rates: 30-year fixed-rate mortgage interest rates average at 4.38%. Those for variable-rate loans average at 2.88%.
    • Risk: The biggest risk to a fixed-rate mortgage is that its interest won’t go down even if the market does better. With an ARM, the risk is a potentially higher interest rate that can make monthly payments difficult to afford.
    • Monthly Payments: For fixed-rate mortgage borrowers, they can easily predict how much they will spend on their monthly payments, since they don’t have to worry about interest rate increases. For borrowers who have an ARM past its teaser rate, they should prepare themselves for regular changes in their monthly payments.

Improving Credit Score: How it Helps

Credit score is one of the primary factors that dictate an applicant’s mortgage eligibility and interest rates. It should go without saying that the higher one’s score, the greater chances of securing lower rates. Consumers who enjoy the best rates are those with an exceptional FICO score – around 800 or higher. (Source: Experian)

This said, borrowers who have a poor credit score rating should first do what they can to improve it. This way, they not only raise their odds of getting a mortgage, but also enjoying better interest rates.



Kentucky Housing Corporation:

USDA Rural Development – Single family loans: