Have you decided to buy a home in Montana? Great choice! Montana is a beautiful state to plant your feet. Make sure you understand the current mortgage rates in Big Sky Country before you dive in and any other factors that can impact your decision. You’ll decide which lender is the best mortgage lender for you in no time.
Get an Instant Mortgage Quote
Tip: compare 2-3 lenders
Quick Look: Best Mortgage Lenders in Montana
- Rocket Mortgage: Best Overall
- Better.com: Best for Online Applications
- New American Funding: Best for Low-income Borrowers
- Chase: Best for Mortgage Options
- Stockman Bank of Montana: Best for Local Service
What is a Mortgage Rate?
Know how mortgage rates work and are set so you can prepare for the financing process. Your mortgage rate is the interest rate on your home loan, which determines the total amount of interest you’ll pay.
You’ll want to look for lower mortgage rates to avoid paying more in interest. Let’s say your home loan is $300,000. You’ll be responsible for paying the entire amount back, plus interest.
There are other factors that affect your mortgage rates — here’s what you should know before you buy a home in Montana.
What Factors Impact Your Mortgage Rate?
A few common influences that affect your mortgage rate include credit score, loan-to-value (LTV) ratio, lender, location, mortgage term and type.
Your credit score plays a huge role when you apply for a loan. Your lender will analyze your credit score and history to understand how you handle debt. Typically, a higher credit score leads to lower mortgage rates. It’s a good idea to know your score before you apply for a mortgage.
Your loan-to-value (LTV) ratio allows lenders to understand how much of a risk your home loan is. Your LTV is calculated by dividing your mortgage amount by your home value. You want a lower LTV percentage to lock in a low rate.
For example, let’s say your home is valued at $220,000 and you decide to put down $35,000. Your mortgage amount would be $185,000. You’ll find your LTV by dividing $185,000 by $220,000 to get 0.84, or 84%. The more you can afford to put down on a home, the lower your LTV.
The lender you choose will also impact your mortgage rate. Different lenders have different rate options and requirements. It’s a good idea to look for lenders with low rate offerings but their eligibility requirements might be higher than other lenders.
Your local housing market plays a large role in how your mortgage rates are set. Typically, the healthier your market is, the lower your rates will be. Since the market fluctuates, you’ll want to review your local market’s health often.
Mortgage Type and Term
The type of mortgage product you choose and the term (or length) of your mortgage also impact your rate.
What is a Mortgage Type?
There are different types of mortgages you’ll be able to choose from, including conventional, FHA, USDA and VA mortgages. Let’s examine mortgage types more closely to better understand how they can affect your mortgage rate.
Funded through banks or credit unions, conventional mortgages are often more easily accessible home loans. They aren’t protected by the government so they’re considered riskier and have higher mortgage rates. However, it can be easier to get approved for them, depending on the lender.
FHA loans are ideal for first-time homebuyers and are funded through the federal government by the Federal Housing Administration. FHA loans have low mortgage rates, low down payment requirements (3% minimum) and low credit score requirements (580–620 minimum). You will need to pay for monthly mortgage insurance to protect your loan if your down payment is lower than 20%.
USDA loans are funded through the federal government by the U.S. Department of Agriculture and are ideal for homeowners who purchase property in rural areas or anywhere outside of major cities. These mortgages are reserved for rural locations, so it’s best to verify if your address qualifies before applying. USDA loans have no down payment options and more flexible credit requirements, but do require monthly mortgage insurance.
VA loans are offered to current and former military members and their families and are funded through the federal government by the Department of Veterans Affairs. VA loans have some of the lowest rates on the market and require no down payment and no mortgage insurance. You will have to pay a 1% origination fee, but this fee can be rolled into your loan amount.
What is a Mortgage Term?
Your mortgage term refers to the duration of your loan, which can affect your mortgage rate. Let’s look at 3 of the most typical mortgage terms so you can understand how your rate might be impacted.
- 30-year fixed: This is the most common mortgage term you’ll find. A 30-year fixed mortgage requires you to pay a fixed mortgage rate over 30 years. Monthly payments are typically smaller for this type of loan. Since you’re paying over such a long period of time, you’ll typically pay a higher amount of interest than other fixed-rate loans.
- 15-year fixed: This is another common fixed-rate mortgage term that requires you to pay the same rate on your mortgage for 15 years. Since the term itself is half of the 30-year loan, you can expect higher monthly payments, but you’ll ultimately pay less interest.
- 5/1 ARM: The 5/1 ARM is an adjustable-rate mortgage that does not have a set rate. You’ll be given an introductory rate that you’ll pay for 5 years. After that, the rate will rise or fall based on the market. This type of term is riskier since you can’t calculate your interest upfront, but can be a good choice if you plan to sell your home after 5 years.
Current Mortgage Rates in Montana
We’ve compiled the current mortgage rates in Montana to help you better predict typical rates for your home. Benzinga researches local market data to provide you with the most updated rates, since the market fluctuates throughout the year.
|Loan Type||Current Mortgage Rate|
|5/1 ARM (adjustable rate)||4.10%|
Calculating Interest in Montana
Many factors determine your individual mortgage rate, but viewing average rates can be helpful. Benzinga has researched the average home values and interest rates for Montana so you can better prepare for how much interest you’ll pay on your new home.
|City||Average Home Value||Loan Term||Current Rate||Monthly Payment||Total Interest Paid|
Lender Credit Score Minimums in Montana
Knowing your credit score can help you better calculate how high or low your mortgage rate might be. It will also help you figure out which lenders are more likely to pre-approve your application. Below is a list of the minimum credit score requirements from 5 top Montana lenders.
|Lender||Minimum Credit Score Required|
|Bank of America||620|
|Figure Home Equity||600|
|JP Morgan Chase||N/A|
5 Best Mortgage Lenders in Montana
Now that you have an idea of how your mortgage rate and credit history will impact your mortgage, it’s time to search for the right lender for your financial situation. We’ve compiled the top 5 mortgage lenders in Montana.
1. Best Overall: Rocket Mortgage
Rocket Mortgage has made it easier than ever to apply for a loan, with its speedy application process, user-friendly interface and a large selection of mortgages.
Rocket Mortgage has online help available and makes uploading income and financial documents painless. Rocket Mortgage requires a 620 credit score and offers conventional, FHA, VA and USDA loans.
2. Best for Online Applications: Better.com
Better.com has an online suite of tools designed to make applying for a mortgage fast and easy.
You’ll receive a pre-approval letter in as little as 24 hours and have access to live customer service help as needed. Better.com requires a 620 credit score and offers conventional and FHA loans.
3. Best for Low-Income Borrowers: New American Funding
New American Funding helps low-income borrowers get approved for financing with manual underwriting, alternative credit history and low down payment requirements. New American Funding also offers a fully online experience so you can track your approval status.
New American Funding requires a 620 credit score (which can be achieved through alternative credit) and offers conventional, FHA, VA and USDA loans.
4. Best for Mortgage Options: Chase
Chase is a great option if you want to explore a large variety of mortgage options available. You can apply online or in-person and existing Chase customers can expect lower rates and other discounts.
Chase has flexible credit score requirements (it varies by mortgage type) and offers conventional, FHA, VA and USDA loans.
5. Best for Local Service: Stockman Bank of Montana
You’ll want to consider Stockman Bank of Montana if you prefer an in-person mortgage application experience. Stockman Bank is top-rated in customer satisfaction and has a large selection of mortgage products.
Stockman Bank also offers a variety of assistance programs for low-income applicants as well as flexible credit score requirements — plus conventional, FHA, VA and USDA loans.
Get the Best Rates in Montana
It’s important to determine how your credit score and local market trends will impact your mortgage rate and the amount of interest you’ll pay on a loan before you buy a home in Montana. You can improve your chances of locking in a low rate by saving for a large down payment or working on your credit score.
Securing a low rate is helpful but it’s not the only factor to consider. Your agent can help you weigh the pros and cons of different mortgage lenders.
Frequently Asked Questions
1) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
2) Q: How much interest will I pay?
Interest that you will pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first-time buyers. Check out the lenders that specialize in making the home buying experience a breeze.