It may not be a "buyer's market" in Connecticut right now, but low interest rates that can make mortgage payments cheaper than rent are encouraging people to pursue homeownership. Last year, home sales rose almost 17 percent from 2014, according to a report from The Warren Group. But if you're venturing into the home buying and mortgage process, you need to understand the market and have the information to find the resources you need. The rest of this page will help guide you closer to finding your dream home in Connecticut.
Check Mortgage Rates in Connecticut
Mortgage rates across the country are low, and Connecticut is no exception. Because of tight inventory, experts say you should get prequalified for a loan before you start house hunting. When you shop for a lender, make sure you understand the "fine print" because loans with the same interest rates aren't always the same. Also, rates change daily so see if locking in an interest rate would make sense for you.
First-Timer Buyer? Homebuying Help in Connecticut
First-time buyers and homebuyers who have not owned a home for three years can qualify for loans offering down payment and closing cost assistance. The Connecticut Housing Finance Authority (CHFA) offers several mortgage assistance programs. Income limits vary by number of people in a household and by town and city to correspond with differences in cost of living and median incomes throughout the state.
Homebuyers also should consider buying homes in targeted areas. Buyers who purchase homes in these areas could qualify for lower interest rates. Norbert Deslauriers, managing director of Homeownership for CHFA, says some of those areas are popular with millennials wanting to live in urban areas near public transportation.
Other resources for home-buying help include potential down payment assistance and grants from employers, municipalities, and economic development agencies. For an in-depth look at the homebuying process, check out this MoneyGeek Guide.
Financial Assistance in Connecticut for First-Time Buyers
Other Connecticut agencies can help first-time homebuyers finance their homes. Here are resources to get you started:
Find a Housing Counselor in Connecticut
Understanding Home Affordability in Connecticut
Movements in Connecticut real estate prices depend on state economic conditions and housing demand. However, personal income, debt load and credit history greatly determine how much house you can afford to buy.
The median home price in Connecticut has bounced back since 2008-09 recessionary lows and is currently about $239,300.
The state's population has remained essentially flat and is expected to continue that way through at least 2020, based on research by the Connecticut Housing Finance Authority. "Connecticut clearly has an unmet need for affordable housing, both rental and ownership," the report states. "This is a more critical issue in the short-term, given that demand for affordable housing is not expected to increase significantly to 2020 because of minimal anticipated population growth."
How Connecticut Mortgage Rates and Home Prices Affect Monthly Payments
|Metro Area||Estimated Monthly Mortgage Payment*||Q1 2016 (Change from Previous Year)||2015 Median Home Price||2014||2013|
|Hartford-West Hartford-East Hartford||$993||$211,400 (+4.30%)||$221,500||$220,900||$227,000|
|New Haven-Milford||$976||$207,600 (+1.20%)||$215,400||$233,300||$226,500|
|Norwich-New London||$779||$165,800 (-2.10%)||$203,600||$180,200||$186,600|
Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today's rates.
Determine How Much You Can Borrow in Connecticut
The Federal Housing Administration sets loan limits to protect the bank loans guaranteed by the government. Loan amounts differ by county. For instance, the limit in Hartford County is $353,050. In Fairfield County, it's $601,450. Take a look at your county in Connecticut with this comprehensive listing.
Get the Expert View on Buying a Home in Connecticut
Toni Dellert is a mortgage underwriter for the Connecticut Housing Finance Authority.
Mike Feldman is president of the Connecticut Association of Realtors.
What do first-time homebuyers often overlook or forget when they start the mortgage lending process?
Going over their credit reports and cleaning up their credit. Most of our borrowers now are pretty savvy following the market crisis eight years ago. Plus, lenders are helpful at guiding people through what they need to do. We also require homebuyers education before we will underwrite a loan.
Get prequalified. Otherwise, you're wasting everybody's time, unless you're paying cash. The mortgage person will probably pull the credit reports to give (him or her) an idea of what [the borrower's] credit is.
Any advice for people with credit scores on the fence, perhaps not quite good enough to secure a mortgage? What can they do to improve their credit-worthiness to qualify for financing?
Credit counseling is probably the best way to understand any problems on your credit report and work on a strategy for getting the numbers back up. Counselors can help you identify all your expenses, all your debts, and set up a budget to manage your money.
They can hire a credit repair agency that goes to the three credit reporting agencies, and they may be able to get some of the deficient lines of credit eliminated. If (a bad debt) happened two years ago but it's still on the report for three years, they may be able to negotiate that away. Sometimes you'll have to pay down some debt. If you pay down the balance and stay current for six months, then that will probably improve the score.
If they have no debt and no credit, the broker will probably recommend you get a credit card and establish a payment history. They'll help you solve those problems.
Is there adequate inventory in Connecticut right now for first-time homebuyers? Are there enough houses within the price range of your average first-time homebuyer?
Connecticut has not completely recovered since 2008. We're super busy and people are definitely buying homes. Just driving around, I see a lot of properties for sale. But I think people are still moving out of the state. This is a very high-tax state and especially for retirees, they're not able to stretch their dollars as far as they need to go.
In the first-time homebuyer price range in Connecticut, we have plenty of houses. Condos are a little more affordable, but at a certain price point, you're probably going to prefer a single-family home if you can stretch just a little further. Most first-time homebuyers can barely make the down payment, so they finance things like the closing costs. It's folded into the loan contract.
There Are Always Closing Costs in Connecticut
Closing costs in Connecticut average $2,033 compared to the national average of $1,847. However, buyers should not expect quick closings as they did in the past. A federal law enacted in October 2015 requires giving homeowners more time to review mortgage documents before closing. Donna DiBenedetto, vice president at McCue Mortgage in New Britain, says banks could close on loans within two days prior to the law change. Now, the closing process can take a week or more.
Average Closing Costs in the Constitution State
Source: Bankrate's 2015 survey of closing costs.
Refinancing a Mortgage in Connecticut
Qualified Connecticut homeowners can obtain refinancing through almost any mortgage lender. The time to refinance is when interest rates are low. The goal is to reduce your monthly mortgage payment and the overall price of the loan by paying less interest on the borrowed amount. Depending on the size of the mortgage, you can potentially save thousands of dollars.
The Home Affordable Refinance Program (HARP) offers refinancing programs in Connecticut with lending limits set by county. A decision is generally made within 48 hours of application. For a comprehensive look at mortgage refinancing, take a look at this MoneyGeek Guide.
Other Connecticut Mortgage Resources
Federal housing department resources specific to homebuyers in Connecticut.
State-backed mortgages, financial assistance and homebuyer education for Connecticut residents.
Managed by the state's housing finance authority, this program helps qualified individuals come up with the money needed to make a down payment and qualify for mortgage financing.
Financial help with down payments. The average program offers about $10,000 in assistance. All programs have different requirements to qualify.
Information on federally-backed mortgages and how to apply for them as a Connecticut resident.
State program offering home loans at below-market interest rates to first-time homebuyers with low mortgage insurance costs.
Closing costs and down payment assistance for state residents who want to buy a home in this Connecticut city.
Lists state government resources to help Connecticut's first-time homebuyers realize their dream.
Homebuying opportunities and assistance exclusively for US veterans living in Connecticut. Managed by the state's housing finance authority.
Help from the state Department of Banking on what to do if endangered by threat of foreclosure.