As 2019 gets underway, the Granite State is in the midst of a white-hot seller’s market. Single-family home prices in New Hampshire increased 7 percent last year, with the current median price sitting at $287,000, according to the New Hampshire Association of Realtors. Despite that steady increase, New Hampshire home prices still sit well below the national median price of $302,400, as of November 2018.
These rising prices are, to some degree, the result of a decreasing housing supply, with 700 fewer homes available on the market compared with last year and representing an 18 percent decrease year over year. Moreover, houses currently stay on the market for an average of 61 days, reflecting the high demand and competitive home buying landscape.
However, the New Hampshire market could reverse course and become more buyer-friendly over the next two or three years, as home prices fall back in line with the Rate of average wage increases in the state.
While national and state-level factors impact mortgage rates in N.H., they are not the only determinants that inform the interest rates borrowers receive on their home loans. Prospective home buyers need to educate themselves on the various elements that impact mortgage and refinancing rates to save the most amount of money possible over the lifetime of their loan.
Current Mortgage & Refinancing Rates in New Hampshire
4 Critical Elements That Affect Mortgage Rate & Refinance Rates in New Hampshire
To guarantee the best mortgage rate possible, borrowers need to be aware of the various factors that determine what lending terms banks, credit unions, and other financial institutions are willing to offer. These four, in particular, can have a profound impact on your mortgage rates and how expensive a loan is over the entirety of its life.
- Credit Score: It should come as no surprise that a borrower’s credit score is one of the most critical factors that dictate how favorable or unfavorable an individual’s mortgage rate offers are. Home buyers with higher credit scores (740 or higher) are more likely to receive lower interest rates attached to their loans than those with poor (below 580) or average (580-670) ratings.
There are a few criteria, each weighted differently, that play into a borrower’s score. FICO scores, for instance, roughly break down like this:
- 35 percent: payment history (in particular, making payments on time)
- 30 percent: amount owed on current accounts (in terms of the percentage of the total credit that is used across all credit cards, loans, and accounts)
- 15 percent: length of credit history
- 10 percent: loan types (borrowers with a greater mix of loans, such as auto and home, are likely to receive more favorable credit scores than those with credit card balances alone)
- 10 percent: new account openings (it’s generally advisable to space out credit and loan applications by at least six months to avoid hurting your credit score)
Lenders will use credit scores as a gauge to identify the level of potential risk in extending a loan to any particular borrower. A record of missed payments, for instance, would immediately raise a red flag with any mortgage lender. Borrowers whose credit scores fall well beyond the “good” to “exceptional” range may be better served working on improving those figures before applying for a mortgage.
- Down payment: The more money a borrower is willing to put forward upfront toward their new home, the lower their interest will likely be. Individuals who can make a significant payment from the outset show lenders that they have the capital to eventually pay off the entirety of their loan while also demonstrating a long-term commitment to the property in question by making a significant initial investment.
Most financial experts agree that home buyers should be willing to make a down payment worth at least 20 percent of the house’s total price to net the best loan terms. In some instances, borrowers may receive lower interest rates paying an amount slightly below that 20 percent threshold because financial institutions will tack on mortgage insurance. The addition of monthly insurance payments may cost home buyers more money over the life of their loan, so they should always compare the total price of any mortgage offer to get the best deal.
- Loan length: There is always a trade-off when choosing between mortgages with shorter or longer payment agreements. Generally speaking, the shorter the loan, the lower the interest rate but, the higher the monthly payment. Conversely, longer durations will have higher interest rates with lower payments.
The 30-year fixed-rate mortgage is relatively standard for home loans, but lenders may also offer loans with 10, 15, 25, 40 or even 50-year lengths. Finding the loan length that’s right for you comes down to how quickly you want to pay off your mortgage and how much money you can realistically dedicate toward your mortgage payments each month.
- Interest rate type: By and large, mortgages come attached with one of two types of interest rates: fixed or adjustable. Fixed rates stay the same throughout the entire duration of the loan, while adjustable rates fluctuate based on market performance. Adjustable-rate loans may offer lower interest rates off the bat when compared with fixed-rate mortgages, but prospective home buyers should be aware that their interest rates may increase significantly after the introductory period has ended. Of course, there is also the chance that their rates will go down, depending on how the market trends.
How to Get the Best Mortgage & Refinancing Rates in New Hampshire
The home buying process is long and often complicated, involving numerous parties, financial institutions, and contractual terms. Shoppers need to resist the urge to try and oversimplify any step along the way, especially when it comes to finding a mortgage. Seemingly minuscule differences in mortgage financing, duration, and other associated fees can add up over the lifetime of a loan.
A mere 0.5 percent reduction in your loan’s interest rate could save borrowers $3,500 during the first five years of their mortgage alone.
Comparative shopping is essential to guaranteeing that borrowers get the best mortgage rates and terms that fit their current financial situation, as well as long-term housing plans. Despite the significant impact that mortgage rates have on the overall cost of a new house, 77 percent of borrowers only apply for a mortgage with one financial institution and approximately half of all home buyers don’t even consider looking beyond a single lender.
Borrowers should also explore all of their loan options. While a 30-year fixed-rate mortgage is the status quo, other loan types may be more attractive depending on an individual’s financial circumstances, long-term housing plans, and other variables. For instance, someone planning to relocate or move into a bigger home may be better off getting an adjustable-rate loan with lower up-front interest rates than a longer, fixed-rate mortgage.
Finally, don’t be afraid to negotiate the terms of your mortgage with your lender. Several fees are typically attached to the home buying process, including appraisal report, application, document preparation, and title search fees. Many of those can be negotiated, especially if the stated cost is higher than the market standard. Check around what other home buyers in New Hampshire have recently paid for these fees and request that yours be reduced to match them.
Recommended Companies in New Hampshire
- Citizens Bank: As the lender with the largest branch network in New Hampshire (69 locations in total), Citizens Bank may be an ideal choice for first-time home buyers who are interested in receiving hands-on guidance from a local institution. The lender offers competitive rates on standard loans like 30-year fixed-rate mortgages but lacks options for United States Department of Agriculture (USDA) or Federal Housing Administration (FHA) loans.
- Guaranteed Rate: While this lender only has a few physical branch locations in N.H., its online services cover the entire gamut of the mortgage application process. Guaranteed Rate also boasts one of the best customer satisfaction ratings among other lenders operating in the state.
- Quicken Loans: Home buyers interested in taking advantage of an FHA loan will be interested to know that Quicken Loans is the largest FHA lender in the country. Its vast lending marketplace allows borrowers to compare numerous quotes and find the right mortgage rate.
- Regency Mortgage: With its wealth of special financing programs, including FHA, USDA, and V.A. loans and mortgage offerings crafted around low down payments, Regency Mortgage is a viable lending option for home buyers with poor credit scores or little on-hand capital.