Mortgage Rates Indiana: Financing Your Dream Indiana Home

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Housing is a basic need, which means demand will always go up. This constant increase in housing demands may make it difficult to find good deals on homes in the State of Indiana.

But if you know the local mortgage and refinance rates in your chosen market, you’ll be able to spot better housing deals, save money, and land the home of your dreams.

In this guide, you’ll learn how to spot the best housing deals in Indiana. Read on for the latest mortgage rates & APR, as well as a comprehensive guide to the state’s homebuyer assistance programs!

Mortgage Options In Indiana

Home loans for American homebuyers often fall into one of three major categories. Here, we break down the details of each.

Conventional Home Loan

Conventional home loans are most commonly offered by banks and other private lending companies. They’re also subject to loan amount limits set by the Federal Housing Finance Agency – for the entire State of Indiana, loan limits are set at the national average of $548,250.

Conventional loans are further broken down into three sub-categories, which are:

Fixed-Rate Mortgage

Fixed-rate mortgages, as the name implies, have static interest rates & APR. Because your rates aren’t influenced by market fluctuations, your monthly payments will remain constant during the loan’s life.

Thanks to this predictability, fixed-rate mortgages are easy to plan for, which makes them popular with first-time homebuyers. However, fixed mortgages also have higher average rates & APR than other loans.

Most lenders offer 30-year fixed-rate mortgages. If you want lower rates, you can opt to take 15-year or 20-year fixed-rate mortgages instead. Keep in mind that shorter loans come with the trade-off of higher monthly payment amounts.

Adjustable-Rate Mortgage (ARM)

Unlike their fixed-rate counterparts, an ARM’s rate changes periodically. Your ARM rate readjusts every year based on a market index, although there is an introductory period of fixed mortgage rates.

The rates & APR during these introductory periods are typically lower, which makes ARMs good for short-term savings. However, ARMs tend to be unpredictable once the adjustable phase starts.

The introductory period on ARMs varies from 3 to 10 years. These periods are denoted on their name – for example, a 5/1 ARM has a five-year fixed-rate period, after which the rates will just annually.

Jumbo Mortgage

Lenders offer jumbo mortgages to those looking to buy more expensive homes. By getting a jumbo mortgage, you can exceed local loan limits with the caveat of a higher mortgage rate.

Government-Backed Loan Programs

The federal government offers mortgage programs aimed at select demographics, like low-credit rating borrowers and military members.

Here are the three main government mortgages, broken down:

FHA loan: Aimed at low-income borrowers, FHA loans feature affordable interest rates, APR, and lower credit score requirements. However, you’re required to pay mortgage insurance fees for the loan’s entire life.
USDA loan: This type of loan has strict area restrictions. If you buy a home in a USDA-approved rural area, you’ll be eligible for a zero-down loan with low mortgage insurance fees.
VA loan: VA loans are zero-down mortgages designed for military members and veterans. To replace mortgage insurance fees, you need to pay an upfront cost called funding fees.

Mortgage Refinancing

In a refinance, you take out a new loan to pay off your existing one. Refinancing is usually done to accomplish one of two things:

Modify your loan term: With a rate and term refinance, you can alter your loan’s length or type. For example, you can shorten your 30-year fixed-rate mortgage to pay it off faster with better rates & APR. You can also change your adjustable-rate loan into a fixed-rate one to avoid the unpredictable adjustable period.
Liquidate home equity: Cash-out refinances convert home equity into cash. With this refi, lenders provide you with a loan that’s larger than your current mortgage balance. After you pay off the mortgage, any money left can be used for other needs.

Current Mortgage Rates In Indiana

Historically, mortgage rate trends in Indiana are higher than the national average mortgage rates. For access to the latest Indiana mortgage rates, check the table below. The mortgage rate information listed here is taken from America’s major mortgage companies.

Compare Today’s Mortgage Rates in Indiana

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Your mortgage rate may vary depending on your financial circumstances. Keep in mind that these mortgage and refinance rates may also change without prior notice.

If you need a personalized look at your Indiana mortgage rates & APR, use the tool at the top of this page. Input your financial details, and we’ll calculate a customized Indiana mortgage rate & APR estimate for you!

First-Time Homebuyer Programs In Indiana

The state offers a suite of assistance programs to help first-time homebuyers. However, as of February 2021, Indiana has suspended state-sponsored loans due to the increased risk of borrowers defaulting. At the moment, the state only offers down payment assistance.

If you’re looking to qualify for down payment assistance from the Indiana Housing & Community Development Authority (IHCDA), you need to fulfill these requirements:

Meet the credit score minimum of 640
Meet IHCDA income and home price limits
Purchase a primary residence in Indiana
Pay a reservation fee of $100

IHCDA First Place

This program offers first-time FHA borrowers a second mortgage worth up to 6% of the purchase price to cover down payment and closing costs. If you stay in the same home for nine years, this second loan will be forgiven.

IHCDA Next Home

The IHCDA’s Next Home down payment program is a state-sponsored loan that covers down payment and closing costs, just like First Place. However, these loans are available for all FHA borrowers and only offer up to 3.5% of the home’s purchase price.

Buying A Home In Indiana

Knowing how to buy a house is just as important as knowing your mortgage options. If you spend too much time figuring out what to do, you may lose out on your dream Indiana home.

To help you buy a home confidently, you can follow this guide!

Step 1: Seek Pre-Approval

The first step you should take before looking at homes is to apply for a loan. As part of your application, you’ll go through pre-approval where the lender checks your financial health.

After pre-approval, lenders will give you a letter containing key details of your loan. This letter states your maximum loan amount, interest rate, and loan type. You can use this letter to decide on your budget as well as demonstrate to sellers that you’re ready to buy a house.

Step 2: Recruit A Realtor With Local Experience

Real estate agents well-versed in the area can help you in many ways, like finding the best housing deals and answering any questions you have about the locality. Thanks to their experience, you don’t have to research key area details such as the average property value and local amenities by yourself – saving you a lot of time.

Step 3: Search For The Right Neighborhood

A good place to start your house hunt is at the neighborhood level. Choose a neighborhood within your price range that fits your lifestyle, then search for affordable homes there.

If the area happens to have low inventory, you may need to get an affordable home that doesn’t quite tick all the boxes. The good news is that some of the money you save from getting a lower mortgage loan can be used for home improvements.

Step 4: Put Down An Offer

You’re likely not the only one with eyes on the house. When offering to buy a house, act quick and sweeten the deal.

One of the best ways to catch a seller’s eye is to make a bid above the listed price. To avoid overpaying on your bid, ask your realtor for advice on how much you should offer.

Step 5: Perform Your Due DIligence

After the seller accepts your offer, the next step is to examine the property. Home inspectors and appraisers help uncover potential issues that may need repairs and determine the actual home value. If the house has serious issues or is severely undervalued, you can renegotiate a deal with the seller.

Step 6: Finalize The Purchase

Before scheduling a closing date, be sure you have money set aside for closing costs and lender fees. On closing day, have your realtor present when signing the paperwork to ensure everything is on the up and up.

How To Get Better Mortgage Rates In Indiana

Mortgages are a large and lengthy financial commitment. Taking a few points off your rate can save you thousands of dollars. To help you save, you can follow our top rate & APR reduction tips!

Take Shorter Loan Terms

Getting a shorter loan helps you save in two ways. First, the lender may give you a better rate because they take less risk on shorter loan terms. Second, you’re reducing how many times you pay mortgage payments – therefore reducing your interest fees. However, shorter loan terms mean higher monthly payments, so make sure you can afford it.

Buy Discount Points

Discount points are another option to lower your interest rate & APR. Lenders offer discount points that typically cost 1% of the loan for a 0.25% rate reduction.

For instance, you can buy 3 points on a $300,000 mortgage with a 4% rate. This means you’re paying $9,000 to reduce your rates to 3.25%.

Due to the high upfront expense, points are best bought if you’re looking for long-term savings. If you’re planning to refinance your loan soon, we don’t recommend buying points.

Compare Loan Offers

Different lenders offer varying rates and fees. Ask for loan estimates from each lender so you can compare their value easily. Examine their interest rate, APR, closing cost, and lender fees to see which lender offers you the best deal.

Closing Thoughts

Getting a good home deal in a competitive market can be tough. However, knowing the mortgage rates and an understanding of the homebuying process can help you secure your dream Indiana home.

If you’re looking for the best deals for your Indiana mortgage, Wesley is here for you. Contact us today for a personal mortgage consultation!