The First State has a big impact — its proximity to the East Coast’s largest cities and popular beaches make it an appealing spot for homeowners. Curious about Delaware’s mortgage rates? Here’s what you need to know before you sign on the dotted line for a purchase or refinance.
Best Mortgage Lenders in Delaware for Rates:
What Is a Mortgage Rate?
Your mortgage rate is the interest rate you pay to borrow money. You repay the lender with interest, which is how the lender makes a profit on the transaction. Mortgage rates might seem low compared to the interest rates you see for other types of loans. Your mortgage may be the largest financial transaction you make, so even a low interest rate can add up to hundreds of thousands of dollars over the life of your loan.
What Factors Impact Your Mortgage Rate?
Lenders look at economic factors when setting rates for new customers, as well as your financial history to decide on the best interest rate to offer you. Here’s a closer look at the factors that impact your mortgage rate:
The Bond Market
Investors look at mortgages as a stable, long-term investment. Treasury bonds are another option for a stable investment. This means that when bonds rates change, mortgage rates change to stay competitive.
The Housing Market
The local housing market can also impact rates. For example, in cities where construction is booming, rates might drop due to home availability. Interest rates might increase because of more competition if there aren’t a lot of available homes.
As the economy grows and the unemployment rate is low, interest rates tend to be higher. This is because there’s more competition for a limited amount of mortgage money to go around. Interest rates go lower when the economy isn’t doing as well, which can encourage people to buy or refinance.
Your Financial History
Lenders look at your financial history in an attempt to predict whether you’ll repay your mortgage. Let’s say you make your debt payments on time. If you do, lenders will see you as a responsible borrower. However, if you consistently miss payments or have even defaulted on loans in the past, lenders might offer you a higher interest rate — if they offer you a mortgage at all. Lenders also consider your income to ensure you make enough to cover your mortgage payments.
What Is a Mortgage Type?
Not all mortgages are the same. Some government agencies back mortgages to encourage homeownership, including those with a less-than-perfect credit history. Here are the most common types of mortgages:
The Federal Housing Administration backs FHA mortgages. These mortgages have low minimum down payment requirements (3.5%) and are available to borrowers with credit scores as low as 580 (500 if you make a 10% down payment).
The U.S. Department of Agriculture insures USDA loans. USDA mortgages are designed to help low- to moderate-income borrowers purchase homes in rural areas. You can purchase a home with no down payment if you qualify.
The Department of Veteran Affairs backs VA loans. Veterans, current service members and eligible dependents may qualify for a VA loan. VA loans have no down payment requirement.
Lenders also offer mortgages that aren’t insured by a government agency. These mortgages are referred to as conventional mortgages.
Government agencies don’t directly provide mortgages. Instead, private lenders offer these mortgages with the approval of the appropriate government agency.
What Is a Mortgage Term?
Your mortgage term is the length of time you’ll pay your mortgage if you just make the required monthly payments each month, with no extra payments. Once you reach the end of your mortgage term, you own your home outright. Here are a few of the most common mortgage loan terms:
A 30-year fixed-rate mortgage offers low, predictable monthly payments. Making the required monthly payments means your mortgage will be paid off in 30 years. Your interest rate will stay the same for the entire time, as will your required monthly payments.
A 15-year fixed-rate mortgage has higher monthly payments than a 30-year fixed-rate mortgage. Lenders offer a lower interest rate since the term is shorter. The fixed rate means that your interest rate and required payments stay the same for all 15 years.
A 5/1 ARM is an adjustable-rate mortgage with a 5-year introductory period. The introductory period has a fixed rate, which may be lower than a comparable fixed-rate mortgage. After the introductory period, the interest rate will adjust once per year. The interest rate may go up or down depending on market conditions.
No mortgage term is inherently better than another. Consider how much interest you’ll pay over the life of the mortgage and whether you’re comfortable with potential rate increases. That’ll be the key to deciding on the term that’s right for you.
Current Mortgage Rates in Delaware
Mortgage rates change daily — as do economic factors. For example, let’s say a report comes out that says the unemployment rate is lower. Lenders may increase interest rates. These changes are usually small, but given how much you borrow with a typical mortgage, even a small change can make a significant impact. Benzinga regularly updates these current mortgage rate charts to reflect current interest rates in Delaware.
Calculating Interest in Delaware
Where does your monthly mortgage payment go? Great question. Some of it goes to pay down your loan balance, some of it goes to pay interest and the rest goes toward insurance and property taxes. Lenders calculate how much you will pay in interest based on your mortgage balance, which gets lower each month.
This means that every month you pay a little bit less in interest and a little bit more toward your mortgage balance. Let’s take a closer look at how much you’ll pay in interest, based on home values in 4 Delaware cities.
|City||Average Home Value||Loan Term||Current Rate||Downpayment (20%)||Monthly Payment||Total Interest Paid|
Lender Credit Score Minimums in Delaware
Your credit score is a 3-digit number that lenders use to evaluate whether or not you’re a high-risk borrower. Credit scoring companies have different scoring models. Each scoring model is different, but in general, scores are based on:
- Your debt payment history
- How much of your available credit is being used
- Age of your credit
Lenders have minimum credit score requirements. Let’s say you don’t meet the minimum. You may not be able to obtain a mortgage until you improve your score.
5 Best Mortgage Lenders in Delaware
Take the time to get multiple refinance or purchase quotes to find the best mortgage rates in Delaware. Consider interest rates, service and overall fees. Here are 5 of the best mortgage companies in Delaware, based on Benzinga’s extensive research.
1. Best Overall: Rocket Mortgage®
Rocket Mortgage® offers a speedy loan process that you can complete online.
Its technology tools are top-notch and you can talk to a loan expert any time via chat or phone. Rocket Mortgage® also offers stellar, award-winning customer service and competitive rates for Delaware residents.
2. Best for First Time Homebuyers: PNC Bank
PNC offers government-back mortgages as well as proprietary options, which gives you the best chance of finding a mortgage that’s right for you.
You can get a preliminary pre-approval online to get a sense of what products might be the best fit for you.
3. Best for VA Mortgages: Veterans United
If you’ve logged some time in the military, Veterans United’s home loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.
In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.
Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.
4. Best for FHA and USDA Mortgages: Pike Creek Mortgage Services
Pike Creek Mortgage Services is the largest independently-owned local mortgage lender in Delaware. This gives Pike Creek unique insights into the Delaware mortgage market.
Pike Creek is also an experienced FHA and USDA lender, which is essential for getting through the documentation requirements that come with these loans.
Pike Creek is committed to closing your mortgage as quickly as possible so you can get into a new home as soon as possible.
5. Best for Refinances: Bank of America
Bank of America offers a range of refinancing products, including cash-out refinances and FHA and VA refinance loans.
Branches are located throughout Delaware if you prefer an in-person experience, but you can also complete much of the application process online. When you’re gathering refinance quotes, consider getting one from Bank of America.
Get a Delaware Mortgage
Like many areas of the East Coast, Delaware housing can be expensive. Delaware offers homebuyer programs to help get you into a home. The Delaware State Housing Program offers programs through lenders to help low- to moderate-income homebuyers purchase a home. The programs do have minimum credit score requirements and income limits, but if you qualify, you may be able to get down payment assistance.
Frequently Asked Questions
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!
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.
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.
Get Ready for Take Off
Rocket Mortgage® is an online mortgage experience developed by the firm formerly known as Quicken Loans®, America’s largest mortgage lender. Rocket Mortgage® makes it easy to get a mortgage — you just tell the company about yourself, your home, your finances and Rocket Mortgage® gives you real interest rates and numbers. You can use Rocket Mortgage® to get approved, ask questions about your mortgage, manage your payments and more.
You can work at your own pace and someone is always there to answer your questions — 24 hours a day, 7 days a week. Want a fast, convenient way to get a mortgage? Give Rocket Mortgage® a try.