Connecticut (CT) refinance packages, offered through mortgage companies, offer smart consumer protections. In particular, most lenders feature fixed rate loans with clear and steady terms. Among these, home refinance loans with 30-year fixed rates are especially popular. Several additional refinance options are offered by private lenders as well as Housing and Urban Development (HUD) via FHA-approved banks.
Overview of the Connecticut housing forecast
The last 10 years have brought ebbs and flows to the Connecticut housing market. According to Zillow, in 2007 the median housing price in Connecticut was $292,000. In 2012, the median price dropped to $231,000. As economic conditions improved, so has the housing outlook. Zillow estimates the median housing value to reach $243,000 by 2018.
House values aren’t the only rates to rise. Two real estate associations predict mortgage rates will rise gradually over 2017. The Mortgage Bankers Association and The National Association of Realtors predict rates to average 4.7 percent and 4.6 percent, respectively, by the end of 2017.
Both forecasts are important for borrowers to be able to determine if refinancing is a viable option for them. If home prices in Connecticut aren’t estimated to drastically change between 2017 and 2018, interest rates on refinances become an important determining factor.
Some Connecticut homeowners who secured a loan in 2008 or before, may be locked into interest rates that hit the 8 percent mark. If this is true for you, it’s likely you’ll be able to find a refinancing interest rate 1 percent or lower than your current rate. These lower rates can mean substantial savings over the remaining life of your loan.
Refinancing in Connecticut provides many financial options for homeowners. (Photo/Wikipedia)
Three home loans, three situations: Refinancing options for Connecticut borrowers
Other borrowers were impacted in different ways during the economic crisis which meant the U.S. Federal Housing Authority (FHA) needed to step up and offer different products in the Connecticut refinancing industry.
Home equity loans, short loans, and home renovation loans are some of the many refinancing options offered through the federal government and FHA-approved banks. FHA loans include something for just about everyone, from the financially-strapped home buyer with an upside-down mortgage to someone whose home investment has paid off handsomely. Here are some federally-supported options that are paying off for home buyers.
First, the most popular options for no cost mortgage refinancing in Connecticut are the Shortline 203(K) and Fannie Mae Rehab/Renovation Loans, which are both focused on home renovations. Second, a much lesser known program is the EEM, or Energy Efficient Mortgage, which rewards energy efficient features. Third, short refinancing loan programs help underwater homeowners.
Shortline 203(K) loans are used for home renovations. They can be used before or during residence in a home, and projects costing up to $35,000 are eligible. Shortline 203(K)s type are a top way to turn an ordinary home into a dream home, or a way to make a dilapidated property fit for living.
Three ways that these and similar Fannie Mae Rehab/Renovation loans are used include:
- To buy an existing home that needs repairs
- To renovate a current residence
- To buy a new home that will be moved to a different location
Energy Efficient Mortgages, or EEMs, recognize that homeowners who make energy-efficient upgrades will save money in the long run. To become eligible for an EEM, a homeowner has their appliances, windows, insulation, and other home features inspected. The property’s current energy efficiency is determined, a cost estimate is made for any desired upgrades and energy savings, and loan terms are set. These are available through the FHA and private lending companies. New refinance mortgage rates in Connecticut are inspiring many home buyers to install solar panels, use efficient lighting, and purchase Energy Star appliances.
Underwater homeowners may be eligible for the FHA Short Refinance program or other partial debt forgiveness programs. Home buyers who are current on their loans may be eligible for the lowest fixed interest rates they’ve seen in years. With short refinancing loans, the loan “falls short”: the original lender agrees to forgive a percentage of the loan on an over-valued property.
Who is eligible for lower refinance rates in Connecticut?
FHA refinance programs offer “regular home buyers” some of the best deals. Refinancing doesn’t have to be exclusively for the ultra-rich. Certain plans will refinance homes for people with credit scores as low as 500.
If you don’t qualify for the options listed above, you might consider a mortgage broker to secure a lower rate for you. Brokers can do the heavy-lifting for you. Because they are connected to many lenders in the industry, they will be able to secure an option that fits your needs the best. Brokers do charge a small fee for their services.
Local banks, community bank or credit unions are also great options to consider for refinancing in Connecticut. The non-profit structure of credit unions often translates to lower fees rates on programs like refinancing products.
Other considerations before refinancing
When is the last time you checked your credit score? While there are products for borrowers with less than stellar credit scores, there are more benefits for those will better credit. The higher your credit, the lower your interest rate will be.
Anyone interested in refinancing will need to determine which product will benefit them the most. Fixed rate loans come in varying terms: 10, 15, 20, or 30-year options tend to be the most popular. Each of these options will have varying interest rates and monthly payment structures. But the luxury of a fixed rate loan means that you’ll know exactly how much you owe for the lifetime of your loan, so you’ll be able to budget accordingly.
Adjustable rate mortgages are another option for refinancing. ARMs come with shorter loan terms than fixed-rate mortgages, and initially low interest. But after the initial fixed interest rate, you’ll be subject to market volatility. Interest rates will ebb and flow based on market value.
If you’re nearing the end of your existing loan, plan to sell your home soon, or anticipate an increase in income, an ARM loan could be a wise option.
Refinancing comes at a cost. Borrowers generally need to come up with upfront funds to cover closing costs like escrow, settlement fees, underwriter fees, and more. Some lenders will allow no cost closing or have other alternatives to offset these costs. Shop around to find a lender that offers you the best deal. Don’t always assume the lowest interest is the best deal.
Last tip: Use a Connecticut mortgage calculator
The best way to get an idea about how refinancing can affect you is by using a mortgage calculator. You can use a mortgage calculator to compare your monthly mortgage obligations like your interest rate and total payments then create changes that are more likely to happen to variables during a borrowing and lending procedure. The adjustments will show how your payment will increase or decrease with different variables.
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