According to Zillow, the typical home value in Pennsylvania is lower than the typical value of $272,446 across the US. The typical home value in Pennsylvania is $217,984, and home values have increased 10.4% over the past year.
If you get a mortgage from a participating lender, you may qualify for one of the following programs through the Pennsylvania Housing Finance Authority:
- Keystone Advantage Assistance Loan Program: Borrow up to 4% of the home sale price or $6,000, whichever is less. You can use this money for down payment or closing cost assistance. You won’t pay any interest, and you’ll pay back the loan over 10 years.
- Employer Assisted Housing Initiative: If your employee participates in this program, you can receive a Keystone Advantage Loan for up to $8,000.
- HOMEstead Down Payment and Closing Cost Assistance Loan: Borrow up to $10,000 for a down payment or closing costs. You won’t pay interest, and the government forgives 20% per year for five years. You must meet certain income and home purchase price requirements to qualify for this loan.
- Mortgage Tax Credit Certificate: Claim 20% to 50% of the interest you pay on the mortgage on your federal taxes, up to $2,000 per year.
- Programs for Persons with Disabilities: If you or a family member is disabled, you may receive money to make necessary improvements to the home you buy. You can also borrow up to $15,000 through the Access Down Payment and Closing Cost Assistance Program. You may be able to combine this assistance with other PHFA programs.
- First Time Home Buyer Program: Centre County has a local down payment assistance program that lends homebuyers up to $10,000.
- Federal Housing Administration mortgage: You can get a down payment of 3.5% with a credit score of at least 580, or get a mortgage with a credit score between 500 and 580 with 10% down using this loan, which is also called an FHA loan.
- United States Department of Agriculture mortgage: These loans, also called USDA loans, can be useful if you are a low-to-moderate income borrower looking to buy a home in a rural or suburban area.
- Veterans Affairs mortgage: These mortgages, also called VA loans, are for active-service military members or veterans, or spouses of members who have died and can provide lower interest rates than conventional mortgages.
Mortgage refinance rates are at all-time lows right now, so it could be a good idea to switch your current mortgage for one with a better interest rate — especially if the new rate would be significantly lower.
You may decide to refinance with the same lender that gave you your initial mortgage, but it’s not always the best idea. A different lender may offer you a better deal the second time around. Shop around for a company that will offer the best interest rate and charge relatively low fees.
Here are some tips for landing a good interest rate on your mortgage:
- Save more for a down payment. With a conventional loan, you may be able to put down as little as 3%. But lenders reward a higher down payment with a better interest rate. Mortgage rates should stay low for a while, so you may have time to save a bigger down payment.
- Increase your credit score. Many lenders require a minimum credit score of 620 to receive a mortgage. But you can land a better interest rate with a higher score. The most important factor for boosting your score is to pay all your bills on time.
- Lower your debt-to-income ratio. Your DTI is the amount you pay toward debts each month, divided by your gross monthly income. Most lenders want to see a DTI of 36% or less for a conventional mortgage, but a lower DTI can result in a lower rate. To improve your DTI, pay down debts or consider opportunities to increase your income.
- Choose a federally backed mortgage. If you’re eligible, you might consider a USDA loan (for low-to-moderate-income borrowers buying in a rural area), a VA loan (for military members and veterans), or an FHA loan (not designated for any particular group). These loans typically come with lower interest rates than conventional mortgages. As a bonus, you won’t need a down payment for USDA or VA loans.
Improving your financial situation and choosing the right type of mortgage for your needs can help you get the best interest rate possible.
By looking at the average mortgage rates in Pennsylvania since 2010, you can see trends for 30-year fixed mortgages, 15-year fixed mortgages, and 7/1 adjustable mortgages:
Seeing how today’s rates compare to historic Pennsylvania mortgage rates may help you decide whether you’d be getting a good deal by getting a mortgage or refinancing now.
A 30-year fixed mortgage comes with a higher interest rate than a shorter-term fixed-rate mortgage. The 30-year fixed rates used to be higher than adjustable rates, but 30-year terms have become the better deal recently.
Your monthly payments on a 30-year term will be lower than on a shorter-term mortgage. You’re spreading payments out over a longer period of time, so you’ll pay less each month.
You’ll pay more in interest in the long term with a 30-year term than you would for a 15-year mortgage, because a) the rate is higher, and b) you’ll be paying interest for longer.
A 15-year fixed-rate mortgage is more affordable than a 30-year term in the long run. The 15-year rates are lower, and you’ll pay off the loan in half the amount of time.
However, your monthly payments will be higher on a 15-year term than a 30-year term. You’re paying off the same loan principal in half the time, so you’ll pay more every month.
With an adjustable-rate loan, your rate stays the same for the first few years, then changes periodically. Your rate is locked in for the first five years on a 5/1 ARM, then your rate increases or decreases once per year.
ARM rates are at all-time lows right now, but a fixed-rate mortgage is still the better deal. The 30-year fixed rates are comparable to or lower than ARM rates. It could be in your best interest to lock in a low rate with a 30-year or 15-year fixed-rate mortgage rather than risk your rate increasing later with an ARM.
If you’re considering an ARM, you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.
Mortgage and refinance rates by state
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