Home values in Pennsylvania have increased sharply since 2011, from that year’s median sale price of $131,000 to $163,000 in 2018, according to real estate database Zillow.
While significantly lower than the national median value of $320,000, according to the U.S. Census Bureau, this significant in-state increase means that it’s important to seek out the best mortgage rates in Pennsylvania.
Zillow estimated a year-to-year increase of more than 5 percent in home value, so it’s very likely that the price of homeownership will continue to increase for some time. With national and local economic factors playing a role, from state law and lender competition to federal decisions about interest rates and the nation’s economy, it’s a complicated marketplace.
Pennsylvania’s size, a mix of urban and rural areas, slowly increasing population, proximity to the densely developed Boston-Washington corridor, and other factors also play a role.
Finding the best mortgage rates in Pennsylvania means understanding the broader economy and your personal situation to find the most useful home loan or refinancing product as well as the most competitive rates and terms. Read on to learn more.
Table of Contents:
Current Mortgage Rates in PA
Mortgage Rates Factors in Pennsylvania
A strong understanding of mortgage rates in Pennsylvania, as well as refinancing options, can help you secure the type of loan you want with the most favorable rates and terms possible.
In many cases, a thorough grasp of the many lenders and options available can help you save thousands of dollars each year instead of needlessly spending it on a more substantial mortgage payment. Researching providers, rates, and terms as well as thoughtfully comparing them puts you in the best position possible.
Your credit score has a significant impact on the loans you qualify for and the terms and conditions involved. Not only can a credit score mean approval or rejection from a specific lender, but it also influences the terms and conditions offered. In general, the higher your credit score, the less you’ll have to pay in interest over the life of your mortgage.
Because a credit score is a quick, generally accurate reference point for the reliability of a customer, many lenders will refer to it early on in the loan application process.
The Consumer Financial Protection Bureau offers a helpful introduction to credit score specifics that can help you understand the factors that go into calculating a score as well as why the exact number will often vary depending on the circumstances in which it is requested and viewed.
The down payment incorporated into a loan agreement affects the amount the lender provides and the associated interest rate in the long term.
It also demonstrates the ability of the customer to fulfill a financial obligation early on in the term of the loan. Generally, a high down payment can reduce costs but requires a significant, up-front commitment of cash, while a low down payment generally provides more immediate financial flexibility but also leads to more interest charged over time.
A 20-percent down payment is the gold standard for traditional mortgages, but there are other mitigating factors involved. Certain types of mortgages, such as Federal Housing Administration loans designed for first-time homebuyers, only require a small down payment as part of an effort to encourage more homeownership.
There are many types of loans available in the current market. The term “traditional mortgage” includes everything from short-term, adjustable-rate home loans to the classic 30-year, fixed-rate option.
There are also jumbo mortgages for especially expensive properties, loans offered by a variety of government agencies if borrowers meet specific lending criteria and other options.
A strong understanding of not only your finances but your situation and any unique factors, including an interest in a home in a rural area, status as an active-duty servicemember or veteran, and not having previously purchased a home all qualify individuals for government loan programs is vital.
Type of Refinance
Refinancing is a common strategy used by a variety of mortgage holders to achieve lower interest rates and reach many other goals. Before you refinance, consider your goals.
A rate and term refinance will help you find better loan terms and conditions. A cash-in refinance means investing more money to realize lower payments and a reduced loan-to-value ratio, while a cash-out refinance allows you to convert part of your established home equity to cash–although at the price of a more considerable total loan amount.
Short refinances help homeowners avoid foreclosure, although they aren’t always readily available. The Home Affordable Refinance Program allows those with home loans already guaranteed by Freddie Mac and Fannie Mae to refinance to avoid entering a state of negative equity with their homes.
Length of Refinancing Term
Just as the length of a mortgage affects the rates and conditions attached to it, so does the period tied to a refinanced mortgage. Shortening a mortgage’s term generally means a lower interest rate, as the Federal Reserve pointed out, because the lender recoups its investment in a shorter period, and leads to a lower total interest paid over the life of the loan.
Of course, the compressed timeline also means the monthly payment can be significantly larger. Conversely, lengthening the term of the mortgage means a lower monthly cost, but a higher interest rate and total interest paid overtime.
How to Get the Best Mortgage Rates in PA
The best way to find effective mortgage rates and favorable terms is to engage in comparative shopping.
The concept itself isn’t complicated: Making initial inquiries at a variety of lenders helps you gather many different mortgage proposals that are easily compared to one another, leaving you to select the choice that best corresponds with your preferences, needs, and financial situation.
However, the Consumer Financial Protection Bureau reported that close to half of all borrowers don’t follow this advice, instead just working with a single lender from start to finish. That can easily lead to a higher interest rate or less-favorable term, and the more considerable costs that come with it.
To make your comparative shopping as effective as possible, plan ahead, actively research options and don’t make a final decision until you’re confident it’s the right one. Determine which mortgage types best apply to your specific situation and seek out lenders that offer them.
Make sure to gather several quotes and don’t be afraid to apply to more than one lender, either. Apply online when possible and make phone calls if an online quote or application isn’t available.
Finally, make sure to pay special attention to fees, which can quickly drive up the amount you owe as the mortgage becomes official. Some costs, like the city or county recording fee, are set by the local government, but many others are more flexible.
You can attempt to lower the loan origination, document preparation, and credit fees, as well as the costs associated with the title search, title insurance, and credit fee.
Recommended Companies in Pennsylvania
There are a variety of lenders to consider in the Keystone State. Top lenders include:
- Quicken Loans: With such a large footprint across the country, it’s easy to see how the company has performed with other customers in the past and has received a ranking of 9.7/10 in our own evaluation of customer service outcomes and strong ratings across the board. Quicken Loans offers a full range of home loans, from traditional fixed- and adjustable-rate mortgages to VA, FHA, and USDA lending options.
- Ally Bank: Another company with nationwide operations, Ally Bank has competitive rates on 30-year fixed-rate mortgages that are often below 5 percent. The online-only nature of services may not appeal to everyone, but those comfortable with the process enjoy intuitive, easy-to-follow procedures from initial inquiry to final approval.
- LendingTree: An online marketplace that can automate some of the work that goes into seeking out rates and terms from different providers. By matching users with up to five different lenders, it’s easy to compare rates across a wide range of different mortgage products.
- J.G. Wentworth: With decades of operation under its belt and a wide range of loan and refinancing products, J.G. Wentworth is an attractive option for many homebuyers. Competitive rates and a fast application process, along with a customer experience rating of 9.5/10 make J.G. Wentworth well worth your consideration when it comes to seeking out a loan.