Missouri offers a fairly buyer-friendly housing market, at least when considered on a national scale. The state’s median home value is $160,200, according to Zillow. The median home value in the St. Louis Metro region is $165,500 as of 1/31/19, Zillow found. However, Zillow categorized the market as neutral, not particularly friendly to either buyers or sellers.
This situation doesn’t give banks any particular incentive to adjust mortgage rates based on market conditions, but it should be noted that Zillow expects home prices to increase significantly in the state moving forward. Now may be the right time to get in on the home-buying action, but that depends on your specific situation. Read on to find out how to acquire the best current mortgage and refinancing rates in Missouri, and what factors can influence your interest rate.
Current Mortgage & Refinancing Rates in Missouri
4 Critical Elements That Affect Mortgage Rate & Refinance Rates in Missouri
The mortgage lending process is a complicated one. It may leave you with lots of questions. Lenders analyze your credit history and, in some cases, a wide range of alternative data sources to identify how much risk is associated with a loan. They’re also going to dig into property values, home values, and both local and macroeconomic issues that could impact the long-term value of the house you plan to purchase.
Once the lender has looked at all of this data and determined the loan’s potential value, a third-party originator often steps in to provide the actual funds, adding another layer of analysis.
As you can see, there are a lot of factors that influence the specific mortgage rate you get for a home you’re considering. Many of these issues are relatively universal. Your credit score is a key guiding point for lenders, helping them quickly understand your credit profile and assess risk. It doesn’t matter where you live or where your home will be; the credit score is constant.
However, your mortgage rate can also be impacted by local trends, such as competition between lenders. For example, if you live in a rural region where many borrowers can access special government-backed loan products for affordable housing, a lender that doesn’t use those programs may offer generally lower rates to try and compete in the region.
Understanding the factors that determine mortgage rates is critical since the savings from a lower rate can be significant. While a drop of a few percentage points may not seem like much, imagine you get a loan with a slightly lower interest rate that saves you $20 per month. The mortgage is for 20 years. That would amount to $4,800 in total savings over the life of the loan. It may be easy to think that your budget can swallow those $20 per month, but when you think about what you could do with nearly $5,000 in savings, the importance you place on acquiring the best rate may increase. With this in mind, here’s a look at four of the most important elements that impact mortgage and refinance rates:
- Credit Score: Your credit score is influential whether you are seeking a new mortgage or looking to refinance an existing loan. In many ways, your credit score is a benchmark that lenders use to determine the amount of debt you can handle and the interest rate necessary for the lender to gain enough value from the loan to justify the risk of providing you with funds. The Consumer Financial Protection Bureau (CFPB) recommends anybody shopping around for mortgages should check their credit scores to identify any errors and dispute them before the mistake leads to higher interest rates.
- Loan Type: There are a wide range of mortgage products available from diverse sources. Banks often offer conventional mortgages in the form of fixed-rate or adjustable-rate loans. But many lenders will also partner with local, state, and federal agencies to provide specialized loan products. These offerings are usually insured or otherwise backed by the agency running the program, reducing the risk incurred by the financial institution. The CFPB explained that many come with significantly different interest rates than a conventional loan, making it especially important to discuss your options with a variety of lenders to explore your options.
- Equity: Equity is the amount of capital you have invested in the home, relative to its value on the market. In most cases, your initial equity will amount to the down payment you can provide at the start of the loan. Banks, on the other hand, must ensure the loans they offer don’t exceed the value of the home. Because of this, your ability to provide equity at the start of the loan can have a dramatic impact on interest rates. If your down payment is larger, the loan is smaller and can often be spread over a shorter term. Your better equity situation reduces the risk the bank is taking and, therefore, leads to a lower rate.
- Location: The CFPB explained that rates can vary slightly from state to state because lenders serving multiple markets will often have varied perceptions of the market dynamics of different regions. It can be helpful to compare larger national lenders with smaller community or regional banks and credit unions to see how the diverse perspectives on your state and local market impact your rate.
How to Get the Best Mortgage & Refinancing Rates in Missouri
The CFPB found that approximately 47% of homebuyers don’t comparison shop when searching for a mortgage. However, if you think about the previously mentioned factors that influence interest rates, looking at options from a wide range of lenders is critical in getting as much value as possible from your loan.
This is especially true in states like Missouri, where you have a mix of major urban areas, such as Kansas City and St. Louis, alongside large rural areas. Different lenders may focus their products on the needs of various communities. For example, a large bank centered in St. Louis may specialize in loans for low-income housing in developing urban neighborhoods, while a community bank in a rural part of the state may partner with the U.S. Department of Agriculture to offer specialized loan products. Shopping around gives you access to more options and potential savings.
It’s also important to note that lenders have widely varied costs and processes associated with obtaining your loan. The Federal Trade Commission strongly recommends that consumers get information from multiple lenders to understand not only rates, but also your options in terms of points, mortgage insurance, and processing fees. For the most part, government fees, such as processing the change in land title, are non-negotiable, but some firms will offer a range of options or freedom to negotiate on certain bank fees. Even if costs aren’t waived, they can sometimes be folded into the loan.
Recommended Companies in Missouri
You have plenty of options to explore when seeking a mortgage in Missouri. A few of the top lenders we recommend are:
- Quicken Loans: Quicken Loans is one of the largest mortgage lenders in the United States and offers a fully online application process that makes it easy to shop around. As of 1/31/19, rates for a 15-year fixed mortgage started at 3.99% with a 4.44%
- LendingTree: Lending Tree stands out because it offers one of the nation’s largest online lending exchanges, giving shoppers access to a variety of mortgage options in one place. This fosters competition between lenders and helps you get the best loan possible.
- NBMC Bank: This lender provides an intuitive online quote process that lets you get immediate insight into what kind of interest rate you can expect. The lender is unique because of its ability to offer various major government loan programs in all 50 states.
- New American Funding: This family-owned bank, with a relatively small branch footprint, uses its online tools to provide a wide range of loan products to almost every state in the United States.