Current mortgage rates in WI are highly influenced by a seller’s market in the Badger State. The Wisconsin Realtors Association’s (WRA) Home Sales Report for October 2018 found that home sales fell slightly year-over-year in October, while prices rose 5.1 percent.
The decline in sales is tied primarily to an inventory shortage and tight market, while the rising costs brought the median home price in Wisconsin up to $182,500, a significant increase from last year’s $172,000 figure.
Wisconsin Mortgage Rates
U.S. Census data shows that the national average home price is approximately $309,000 which means that, even with these general increases, home prices in Wisconsin are still relatively low. In fact, Milwaukee is a particularly affordable buyer’s market, as Zillow found the median home price is currently $117,600.
Milwaukee notwithstanding, there’s still a seller’s market across the state, creating heavy competition that can be challenging to navigate through. This makes shopping around for the best rate a necessity.
It’s also essential to lock in your rate and ensure you’re ready to move quickly on purchases to avoid missing out on opportunities as they arise.
5 Critical Elements That Affect Mortgage & Refinance Rates in Wisconsin
A small change in interest rates can have an outsized impact on your spending over the course of a mortgage. Even the smallest change (say, less than 1%) can lead to monthly savings.
But imagine you’ve reduced your mortgage payment by $25 per month. For a 15-year mortgage, that would amount to approximately $4,500 in total savings. For a 30-year term, that figure climbs to $9,000.
You don’t have to be a master negotiator to reduce your rate. Even a fraction of a percentage point drop can make a difference in finding the right deal. To do this, you must first understand the major factors that contribute to the mortgage rates you’ll be presented with.
For the most part, rates are impacted by individual attributes and national economics, but some local or regional trends can come into play. Five of the most prominent factors impacting mortgage and refinancing rates are:
- Credit Score: This one almost goes without saying. Your credit score is the primary factor that most lenders use to identify any risk associated with lending to you. A higher score minimizes the expected risk, which means they can offer you a lower mortgage rate.
- Co-borrowing: You may want to apply for a mortgage with your partner or another co-borrower who will share responsibility for the loan. A Zillow Porchlight report clarified this process, showing that such a loan setup usually defaults to basing the mortgage rate on the lowest credit score of those involved in the loan.
According to the report, dealing with the lower of the two credit scores isn’t always a net negative. Since mortgage rates are also influenced by income levels, the benefits of having multiple incomes supporting the loan may be more advantageous than the negative impact of having a lower credit score included in the equation.
Ultimately, you’ll want to weigh how the incomes and credit scores involved in co-borrowing affect your rates and then structure the loan accordingly.
- Debt-to-Income Ratio: Whether you’re hoping to refinance or are seeking a new mortgage, getting the best possible rate depends on having a strong debt-to-income ratio. A 36 percent or less ratio after the mortgage is usually a good place to be, meaning that you don’t have monthly debt payments that exceed 36 percent of your income.
Lenders only use your gross income to make this calculation, and they don’t account for many of your expenses. This means that even though a bank approves your loan based on how it would impact your debt-to-income, it doesn’t necessarily mean that you can afford the loan.
Nonetheless, the better your debt-to-income ratio, the likelier it is that you’ll get a lower rate.
- Housing Market: Supply and demand are an unavoidable economic factor. The Consumer Financial Protection Bureau (CFPB) explained that lenders tweak their rates by using the market dynamics of the state in which you’ll be purchasing the home.
The local market won’t dictate rates nearly as much like credit scores and other key metrics do, but it can often lead to small changes. When it comes to current mortgage rates in WI, the deal you get could be heavily impacted by a seller’s market and the generally affordable nature of homes.
It’s important to consider local economic issues if you’re refinancing as well, as you may be able to get a better deal at a time when the market is stronger.
- Down payment: This is another fairly simple issue to consider. The more money you initially pay into the home, the smaller your loan will be. Smaller loans mean you’re taking on less debt and banks are assuming less of a risk by lending to you. This can lead lenders to offer lower mortgage rates.
While a larger down payment can lead to a lower rate, you might also want to consider how those funds may be used in other ways to influence the total costs of your home-purchasing process. For example, you may be able to purchase points, which some lenders use to directly reduce your mortgage rates.
How to Get the Best Mortgage & Refinancing Rates in Wisconsin
Shop around. It may sound simple, but one of the single most important things for you to do is to look at a variety of lenders before settling on a mortgage. Historically, the process of applying for a mortgage has been so complex that going to multiple banks was a time-consuming process.
Today, many lenders offer quotes online or over the phone, making it much easier to compare prices. What’s more, mortgage marketplaces compile information from a variety of banks and credit unions so you can more easily find the right loan.
With personal, local, banking industry, and macroeconomic trends all influencing rates, you’ll generally see diversity across lenders. Shopping around helps you find the right deal.
As you shop around, it’s important to note that getting multiple quotes won’t necessarily hurt your credit score. According to FICO, the credit scoring agency will log all applications for the same loan type as one credit application, as long as they are requested during a typical purchasing pattern.
For mortgages, FICO uses a 30-day term to define the typical purchasing pattern. This means that getting quotes on 10 mortgages within a month won’t show that you’ve applied for 10 lines of credit. It’ll be reflected as just one mortgage application, ensuring that your credit score doesn’t suffer because you’re looking for the right deal.
Recommended Mortgage Companies in Wisconsin
- Quicken Loans: One of the largest lenders in the U.S., Quicken Loans offers an online lending process aimed at cutting out unnecessary paperwork and other expensive processes that lead to higher mortgage rates.
- LendingTree: As a mortgage marketplace, LendingTree is designed for one-stop comparison shopping. The site’s user-friendly interface allows customers to navigate through the lending process completely pain-free.
- Rocket Mortgage: Rocket Mortgage provides a quick and completely online lending process that simplifies just about every facet of obtaining a mortgage. Rocket Mortgage is a branch of Quicken Loans.
- AmeriValue: Another online lender, AmeriValue stands out for its user-friendly quote process. They walk you through the steps and tell you what information you’ll need to provide to get a fast, accurate quote.