Mortgage rates are a very important part of any home buying experience and many people go into buying a home without any knowledge of current rates. Knowing what rates apply to the area in which you are shopping for a home can help to reduce your stress and can help you determine how much home you can afford and what your monthly payments are likely to be. Kentucky is a state with a fairly steady mortgage rate and in most cases, the rates you see are not going to fluctuate too greatly during your buying process. That being said however, if you see a great rate, you should probably jump on it.
What Are the Current Mortgage Rates Across the State of Kentucky?
According to recent studies the average mortgage rate for a 30 year, fixed rate mortgage is about 3.57%, this is a rise of 0.03 from recent months. The current rate for a 15 year fixed rate mortgage is about 2.87% which is a rise of about 0.04%. The current average rate for a 5/1 Year ARM mortgage is about 3.20% which is a rise of about 0.01. Though mortgage rates in the state are rising, the rise is so small that it is not going to affect your bottom line greatly when you do start to decide what home to purchase.
These rates are a reflection of the average rates that banks and lenders are offering across the state. The recent recovery of the housing and real estate market has helped to reduce mortgage rates tremendously for a few different reasons. For starters, it is no longer a huge risk for banks to lend buyers money to purchase homes because the economy has improved and more and more home buyers are able to continue paying for their homes, which means that the overall rate of bankruptcies and abandoning mortgages has gone down significantly. The better the economy and house buying market, the better the mortgage rates that are going to be offered to those buyers.
What Factors Affect Your Personal Mortgage Rate?
Just because the average rate across the state is about 3.57%, that does not mean that you are going to get that exact mortgage rate when you do go to ask the bank for a loan. Instead, there are a few different factors that help determine your individual mortgage rate. Â There are actually seven factors that can affect your overall rate and they have to do with the home and with your own personal finance. The first factor is your credit score.
The higher your score, the lower your rate as this shows lenders that you repay your debts and that you a reliable individual that is going to pay back their loan. The second factor is the location of the house. The more desirable the location, the better your rates. A great example of this is building in a rural area as opposed to building or buying in the city. Rates are going to be better in the city because the property is more desirable.
Another factor to consider is home price and the overall amount of the loan. Obviously, lower amounts are going to result in better rates as there is less of a risk involved in the bank lending you the money. The mortgage rate on $300,000 is going to be significantly higher than the rate on $120,000. Still another factor is your down payment. If you have money to put down to help lower your principle, you can also lower your mortgage rate. 20% down is the general amount and it can truly help to reduce your mortgage rates.
Another factor is, of course, the loan term. The longer the loan, the higher the rate because there is more risk involved. Interest rates can also affect mortgage rates. There are two types, fixed, in which the rate does not change, and adjustable, where it changes according to the market. The second type can go up so it is generally riskier for the buyer. Loan type is the last factor that may affect your overall mortgage rate. FHA, VA, conventional, and more are all types of loans that you will want to discuss with your financial officer when you start your mortgage paperwork.
What Are the 2016Â Mortgage Rate Predictions for Kentucky?
Many experts predict that in the coming months there will be some upset in the mortgage rates that we saw in 2015. Though no experts expect the rates to go sky high, the improving economy, larger number of borrowers, and changes in Federal rates and regulations may end up in a change in the rates we currently see. At the end of 2015 rates were steady at just under 4% and most experts expect this trend to remain steady.
In the case of higher rates, though there may be some fluctuation, there is no debt crisis, no economic crisis, and no real data to support the idea that rates are going to go through the roof in the coming months. The biggest concern for many is the upcoming Presidential election and the potential for rate hikes based on policy change. For the most part, however, the first year in office for any President is not going to be spent worrying about mortgage rates.
Most experts contend that while there is always a chance for an upset, the chances that there is going to be some huge downturn that forces mortgage rates up is highly unlikely. The trend will most likely follow the past few years with rates going up and down without becoming incredibly low or incredibly high.
2 Point Highlight
Just because the average rate across the state is about 3.57%, that does not mean that you are going to get that exact mortgage rate when you do go to ask the bank for a loan.
