Mortgage Rates Kentucky

Mortgage Rates Kentucky: Knowing Your Loan Options

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Over one year after the coronavirus pandemic started, the Kentucky housing market is still on an uptrend. Since high demand leads to high median home prices and low inventories, buying a home in Kentucky can be challenging. To make finding the best deals easier, you should know the local mortgage and refinance rates.

This guide has everything you need to know about Kentucky’s mortgage rates. We also provide insider access to the latest Kentucky mortgage and refinance rates. Not only that, but we’ll also help you find the most affordable mortgage for your home in the Bluegrass State!

Mortgage Options In Kentucky

Most American homebuyers have access to three main mortgage loan types. These loans have their unique ways of calculating rate & APR as well as their own individual pros and cons.

Conventional Home Loan 

Conventional mortgages are most commonly offered by banks and other private mortgage companies. These home loans are subject to local loan limits determined by the Federal Housing Finance Agency. Whether you’re looking for a home in Louisville or Bowling Green, conforming loan limits in the entire state are set at $548,250. 

Conventional loans are further divided into three categories, which we’ll break down next.

Fixed-Rate Mortgage

A fixed-rate mortgage’s main advantage is its constant interest rate & APR. Because your mortgage rate does not change with economic fluctuations, your monthly payment amount will also stay constant. This predictability makes fixed-rate mortgages popular with long-term planners and first-time homebuyers. However, these loans typically have higher interest rates & APR compared to other types.

Most fixed-rate mortgages have 30-year loan terms. However, you can opt for shorter 15-year or 20-year loan terms if you want lower rates & APR. These lower rates come at the cost of higher monthly payment expenses.

Adjustable-Rate Mortgage (ARM)

Adjustable-rate mortgages feature a rate that changes annually. These ARM rate changes are made according to an index chosen by the lender. ARMs also feature a fixed-rate introductory period for the first number of years. The rates & APR on introductory periods are typically lower, making ARMs a good option for short-term savings.

The introductory period on ARMs is denoted by their names. For example, a 5/1 ARM has five years of introductory rates. Lenders can offer you introductory periods anywhere from 3 to 10 years. 

Jumbo Mortgage

If you’re planning to buy homes priced above local loan limits, ask for a jumbo mortgage. With this option, you can exceed loan amount limits at the cost of higher mortgage interest rates & APR.

Government-Backed Loan 

The U.S. federal government offers several loan programs to boost the homeownership rate in select demographics, like rural residents and low-income borrowers. 

There are three main loan programs offered by the federal government:

• FHA loans: This loan program is made for low-income borrowers. They feature affordable rates and a lower credit score requirement. As a tradeoff, borrowers must pay mortgage insurance fees for the entire loan’s life. 
• USDA loans: Designed for buying rural properties, these loans have strict area restrictions. If you buy a home in USDA-approved areas, you’ll receive a no-down payment loan with lower mortgage insurance fees.
• VA loans: VA loans offer military members a zero-down loan with affordable rates. As a substitute for mortgage insurance, you’re required to pay an upfront cost called funding fees. 

Mortgage Refinancing

If you already have a mortgage, you can refinance to get lower rates & APR. Refinancing entails taking out a new loan to pay off your existing one. There are two types of refinancing available:

• Rate and term refinancing: This type of refinance is taken to modify your loan terms. You can change your loan type from an ARM to fixed-rate or vice versa as well as change your loan’s length.
• Cash-out refinancing: You can leverage home equity using this type of refinancing. Cash-out refinances work by providing you a loan that’s larger than your current loan balance. Any money left after paying off your mortgage can be used for other things.

Current Mortgage Rates In Kentucky

Historically, mortgage rate trends in Kentucky hover just above national average mortgage rates. Here, we present the latest Kentucky mortgage rates & APR. This data is taken from America’s top mortgage lenders and updated daily.

Today’s Mortgage Rates in Kentucky

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Your rates & APR may vary depending on your financial circumstances. The listed mortgage and refinance rates may change without prior notice.

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

First-Time Homebuyer Programs In Kentucky 

To help first-timers buy homes, the State of Kentucky offers several assistance programs. To qualify for these programs offered by the Kentucky Housing Corporation, you need to fulfill these requirements:

• Provide a 3% down payment
• Meet minimum credit score requirement and income limits
• Purchase a single-family primary residence in Kentucky
• Meet the KHC home price limit

KHC Conventional Preferred

The main state-sponsored mortgage program offers you a 30-year fixed-rate mortgage. While you don’t need to make a borrower contribution you still need to pay for reduced-rate mortgage insurance fees. Some lenders may also require you to complete a homebuyer education course to qualify for this program.

KHC Regular Down Payment Assistance Program

KHC mortgage borrowers are also eligible for down payment and closing cost assistance worth up to $6,000. This assistance comes in the form of a 10-year loan at a 5.5% interest rate. 

Buying A Home In Kentucky 

For first-time homebuyers, the purchase process can be somewhat confusing. Spending too much time figuring out what to do can cause you to lose out on your dream home. To make the process easier, we’ve compiled a guide to homebuying in six simple steps!  

Step 1: Seek Pre-Approval

Financial readiness is the first key to buying a home. You can check your mortgage eligibility and financial health at the same time by applying for a home loan. During a process called pre-approval, lenders will check your finances to see whether you’re ready to take on a mortgage.

Once you get pre-approved, you’ll receive a pre-approval letter. This document contains key details about your mortgage, such as its maximum loan amount, interest rate, and length. 

Step 2: Enlist A Realtor

Having a real estate agent with local experience on your team can help immensely. You won’t just benefit from their ability to secure the best home deals – you can also ask them about key details of the local area. With their assistance, you won’t have to search for the area’s average home value, commute times, and other important information alone.

Step 3: Search Property Listings

The right neighborhood is just as important as the home itself. Find a neighborhood that fits your budget and lifestyle, then look for the most affordable home that suits you. While you may end up not using all your mortgage allowance, any money left can be used to make home improvements. 

Step 4: Make The Offer

To make your house-hunting in Kentucky easier, be sure to stand out from the competition by making a larger bid. You can do this by speaking with your real estate agent about how much you should offer above the listed home price and not just rely on an initial guess.

Step 5: Schedule Inspections And Appraisals

The seller accepting your offer isn’t the end of your journey. To ensure everything is on the up and up, you need to check the house thoroughly. This is where inspectors and appraisers come in. A home inspector can help you spot issues that may need repairs, while appraisers ensure that your house is appropriately valued. 

If you find any issues or find that the home is overvalued, you can still re-negotiate another deal with the seller. 

Step 6: Finish The Purchase

Prior to closing day, make sure you’ve prepared the money to pay the closing cost and lender fees. On the closing day itself, have your real estate agent accompany you during the paperwork signing so they can explain anything you don’t understand. As soon as the paperwork is done, it’s time to make moving arrangements. 

How To Get A Better Kentucky Mortgage Rate 

Mortgages are a long-term commitment, which means even the smallest reduction in basis points can mean thousands in savings. To help you get the best KY mortgage rates, you can follow these tips! 

Consider Buying Mortgage Points

Your lender may offer you discount points when you apply for a loan. These points are usually worth 1% of the loan each and provide a 0.25% interest rate reduction. For example, two points on a $300,000 mortgage with a 3.5% interest rate will cost you $6,000 upfront and provide a 0.5% rate reduction. 

Since the upfront cost of discount points is relatively high, it may take some time for the savings to pay off. Therefore, points are best bought on loans that you won’t refinance. 

Get Advice From Mortgage Brokers

An independent mortgage broker’s experience can be indispensable when you’re loan shopping. They know how to find the best mortgage deals with the lowest rates and closing fees. Moreover, they can do the heavy lifting of comparing offers from multiple companies while you concentrate on finding your dream Kentucky home. 

Participate In First-Time Homebuyer Programs

If you fulfill the criteria, state-run homeownership programs can be a powerful alternative. They typically offer competitive rates and you can also apply for down payment assistance programs. However, the requirements may be limiting if you’re looking to buy larger homes. 

Closing Thoughts 

We know that finding the right property can be a daunting task, especially in a competitive market. With knowledge of the local mortgage rates and the homebuying process, you’ll stand a better chance of getting your dream Kentucky home. 

Wesley LLC is here to help you find the perfect mortgage for your Kentucky home. Contact our team today for more mortgage resources and schedule a personal consultation!