How to Buy a House in Connecticut: A Homebuyer’s Guide

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Edited byAshley Jacobs
Edited byAshley Jacobs

Updated: February 27, 2023

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The average cost of homes in Connecticut is $359,559. This is slightly higher than the national average of $357,589, which makes Connecticut one of the more expensive states to buy a house. Compared to home values in 2021, current median home prices in Connecticut are 10.7% higher.

Although home values in Connecticut are higher than average, the increase in price over the past year is lower than the average national increase, which is 13.5%.

If you want to figure out the best or cheapest places to buy a house in Connecticut, it is important to understand the process of homebuying. This will help you avoid common pitfalls that could lead you into debt.

Key Takeaways

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Homes in Connecticut cost an average of $359,559, which is higher than the national average.

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Mortgage lenders consider factors like your credit score, income and debt-to-income ratio to qualify you for a mortgage and determine your mortgage rates.

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Buying a home in Connecticut involves identifying an appropriate location, looking up mortgage rates and getting pre-approved for a mortgage before carrying out a home inspection and closing on your mortgage.

Choose an Ideal Location

Location is one of the most important factors when choosing the best place to buy a house in Connecticut. Not only does it affect the cost of your home, but it also impacts factors like access to social amenities, cost of living and the neighborhood culture you will be living in.

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WORK WITH A REAL ESTATE AGENT

As a homebuyer, it is important to find a real estate agent to help you on your journey to home ownership. The right agent will help you find the best properties based on your budget and preferences. They will also be familiar with local laws and regulations, which can help make the homebuying process fast and seamless.

There are plenty of real estate agents in Connecticut, but it is important to evaluate them to ensure that you are working with a professional. Some of the factors to consider when choosing an agent include the following:

  • Good knowledge of the local area
  • Has a proven track record and references you can check
  • Duly licensed
  • Experience in the neighborhoods you are considering

You can also get referrals for reputable agents from trusted friends or family.

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CALCULATE THE COST OF LIVING

Before you choose the best place to buy a house in Connecticut, it is important to also consider the cost of living in that area. The cost of living can vary significantly depending on where you choose to reside.

Some of the expenses you need to keep in mind when choosing a location include the following:

  • Utilities
  • Property taxes
  • Food
  • Education
  • Healthcare
  • Transportation
  • Entertainment

You can compare how living expenses vary depending on location using MoneyGeek’s cost of living calculator.

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CONSIDER AFFORDABLE NEIGHBORHOODS

Connecticut is a relatively expensive state to live in, but you can save on costs by shopping for a home in affordable neighborhoods. Opting for a home in the suburbs may help you save on living expenses since costs tend to be lower in non-metropolitan areas. However, there might be less access to amenities such as hospitals, schools and malls in the suburbs compared to metropolitan areas.

If you are looking for the cheapest places to buy a house in Connecticut, cities like New Britain, Meriden and Newington are good options.

Calculate Mortgage Rates

Homebuyers in Connecticut can choose from different mortgage options depending on their background and needs. It is important to be aware that the type of mortgage you choose will impact factors like your mortgage rates, downpayment and other terms.

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SEE YOUR MORTGAGE OPTIONS

Different mortgage options carry different mortgage rates, but your individual profile will also determine your rates. For instance, borrowers with good credit typically get better rates since they are considered more creditworthy.

Depending on the type of mortgage, you can expect to pay the following mortgage rates in Connecticut for a 30-year fixed term:

Note that certain types of home loans, like USDA loans, have specific eligibility requirements to qualify. VA loans are also only available to veterans or active-duty military members.

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USE A MORTGAGE CALCULATOR

Home loans require long-term monthly payments, so it is important to figure out if you can afford these beforehand. Calculating mortgage rates will help you understand the total cost of your loan and what your monthly payments will look like for better planning.

MoneyGeek’s mortgage calculator can help you get an estimate of your mortgage payments based on factors like the home price, down payment and the term of your mortgage. You can also compare rates between conventional and FHA home loans to find the most affordable option for your background.

After you can calculate your estimate, you can use it to verify whether or not the mortgage fits within your budget. You can also compare rates until you get an option that suits your financial situation.

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KNOW YOUR QUALIFICATIONS

Mortgage terms like the length of your loan, interest rate and loan limit will largely depend on your profile. This means that the lender will assess your creditworthiness based on factors like:

  • Credit score: Lenders will determine your creditworthiness based on your credit score. Borrowers with good to excellent scores qualify for better rates and terms.
  • Income: Your income is an important factor and will also be used as an indicator of your creditworthiness.
  • Debt-to-income ratio (DTI): Lenders typically assess the borrower's ability to repay their loan based on factors like their debt-to-income ratio. Some lenders have a specific DTI requirement.
  • Down payment: Borrowers with a higher down payment will qualify for better mortgage rates since they are considered more creditworthy.

Prepare Down Payment Requirements

A down payment is an amount you are required to pay upfront before the lender can finance your home loan. Down payment requirements vary depending on the type of mortgage and will affect the total cost of your home loan.

The higher the down payment is, the lower the mortgage rates will be and vice versa.

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DETERMINE DOWN PAYMENT REQUIREMENTS

The down payment you will be required to pay will largely depend on the type of mortgage you qualify for. Most conventional loans require potential homebuyers to have a down payment of at least 20%. For eligible borrowers, VA loans and USDA home loans do not require a downpayment. This means that for these types of loans, you can get financing with a 0% down payment.

While low down payment options are great if you are low on funds, keep in mind that the down payment impacts your mortgage rates and monthly payments. Homebuyers who put up a larger down payment get better rates and lower monthly payments.

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CALCULATE MORTGAGE INSURANCE

Lenders may charge borrowers mortgage insurance for their home loans. Mortgage insurance helps to protect the lender in case the borrower defaults on their mortgage payments. However, not all types of home loans require mortgage insurance.

  • Conventional loans: Require private mortgage insurance (PMI) if the down payment is less than 20%. The cost of PMI will vary depending on factors like the down payment, your credit score and loan term.
  • FHA loans: Require mortgage insurance. Rates will vary depending on the term of the home loan.
  • VA loans: Do not require mortgage insurance.
  • USDA loans: Do not require mortgage insurance, but an annual guarantee fee is charged.
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DOWN PAYMENT ASSISTANCE PROGRAMS

If you are a first-time homebuyer in Connecticut, you may qualify for down payment assistance. Down payment assistance programs help buyers to cover down payment and closing costs.

Some of the assistance programs available in Connecticut include:

  • Fairfield Homeownership Assistance Program: This program is available to first-time homebuyers in Fairfield, Connecticut.
  • Hamden First-Time Homebuyer Down Payment Assistance Grant: Hamden's Office of Housing and Neighborhood Development offers down payment assistance of up to $5,000 for eligible borrowers.
  • HouseHartford Homebuyer Assistance Program: Low and middle-income buyers in Hartford, Connecticut, can qualify for down payment assistance of up to $40,000.

Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage is an important step in the homebuying process. A pre-approval confirms that the lender is willing to loan you a specific amount. This is different from a prequalification because when you prequalify, it only means that you are eligible for a loan. It is not a commitment from the lender to loan you a specific amount.

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GATHER NECESSARY DOCUMENTS

Mortgage lenders require your personal and financial information to evaluate your qualifications for a home loan. This means you will need to submit an application with supporting documentation, including:

  • A copy of your driver's license
  • A copy of your Social Security card
  • Three years of tax returns with W-2s
  • Current pay stubs or profit and loss statements for the self-employed
  • Bank account statements

Different lenders may also have other documentation requirements depending on your background. Find out from your preferred lender what documents are required to complete your application.

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TIME YOUR PRE-APPROVAL

On average, it takes up to 10 days to get a pre-approval letter from the mortgage lender once your application is approved. Once you have a pre-approval letter, you can organize your documents to ensure that the process of closing your mortgage proceeds quickly.

Keep in mind that pre-approval letters have a specified validity period. In most cases, your pre-approval will be valid for 30 to 90 days, depending on the lender. Once the validity has lapsed, you will need to reapply for another letter. This means it is important to only apply for pre-approval when you are ready to buy a home.

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RECEIVE PRE-APPROVAL LETTER

A pre-approval letter is given by the mortgage lender to the borrower as a commitment to lend the buyer a specified amount. The pre-approval letter will usually indicate the details of the mortgage offer the lender is willing to give you, including:

  • The maximum loan limit
  • Loan term
  • Monthly payments
  • Interest rate

It is possible to get multiple pre-approval letters from different lenders since there is no limit on how many pre-approval letters you can get. However, since pre-approvals require a hard credit check, this can impact your credit score negatively.

Pre-approval letters are typically valid for 30 to 90 days, so you will need to reapply after this period lapses.

Conduct a Home Inspection

Before purchasing a home, it is crucial to get a professional home inspection. A home inspection will uncover any issues or flaws in the property and help you understand what you are potentially signing up for.

Mortgage lenders may not always require home inspections, but they can help you avoid buying damaged or unsafe property.

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CONTACT A LICENSED INSPECTOR

Home inspectors need to be licensed and registered. This ensures that you are working with a professional who will help you verify that the property you want to buy is in good condition. Your real estate agent can help you identify a reputable home inspector. You can also get recommendations from people who have bought a home.

Some of the areas that a home inspection needs to cover when checking the property you want to buy include:

  • Foundation
  • Roof
  • Electrical system
  • Heating and cooling systems
  • Plumbing
  • Major appliances
  • Windows and doors
  • Exterior of the house
  • Surrounding grounds
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FOLLOW CONNECTICUT-SPECIFIC INSPECTIONS

Connecticut does not mandate any specific home inspections for the homebuyer. However, a professional home inspector will ensure that they have thoroughly checked the main parts of the property you want to buy, including the roof, foundation, HVAC systems, plumbing and other important features.

Some counties and cities may have their own regulations on home inspections, so it is important to check with your real estate agent for any regulations that apply in your area. Although sellers are required to disclose any defects before selling, a home inspection is the best way to get an objective idea of the state of the property you want to buy.

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GO THROUGH APPRAISAL

Before the mortgage lender can finance your home, they will require an appraisal of the property. An appraisal is typically done by a professional appraiser to ascertain the actual value of the property based on the features of the home and the current market rate.

Appraisals are important since the appraised value is not always the same as the listing price. The appraised value helps the lender determine whether or not the homebuyer is overborrowing, which can pose a risk to the lender if the buyer defaults. You can request a copy of the appraisal report from the lender.

Close Your Mortgage Loan

Once you have reviewed and understand the terms of the home loan, closing your mortgage is the final step. Keep in mind that the homebuyer incurs certain closing costs. Those who qualify for down payment assistance programs in Connecticut can get help with the closing costs.

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SIGN ALL DOCUMENTS

Buying a home comes with plenty of paperwork, so it is important to ensure that you read and understand all the documentation before signing. Some of the key documents that you will be required to sign include the following:

  • Final loan application: You will be required to sign the original loan application to confirm that all your details are correct.
  • Mortgage note: The mortgage note specifies the mortgage amount, interest, payment dates and terms.
  • Property deed: The property deed indicates that the property has been transferred from the seller to the buyer.
  • Closing disclosure: Your lender will provide you with a closing disclosure specifying the terms of your mortgage three business days before you close.
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PAY CLOSING COSTS

Closing costs usually make up between 2% to 5% of the total purchase price. These costs can vary depending on the type of mortgage and lender. You can expect to incur the following closing fees:

  • Origination fee: Depending on your lender, you might be required to pay a small percentage of your home loan as origination fees.
  • Escrow: Escrow includes various costs, such as the homeowner’s insurance, property tax, mortgage insurance where applicable and annual funding fees.
  • Home inspection fees: The cost of a home inspection is met by the buyer.
  • Title search charges: A title search is conducted to verify the rightful owner of the property. The costs involved are typically covered by the buyer.
  • Appraisal fees: These are the fees charged for a home appraisal to verify the market value of the property you are buying.
  • Third-party fees: You may incur attorney fees, homeowners association transfer fees and any other fees applicable depending on your situation.
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COMPLETE YOUR HOME PURCHASE

When looking to buy a home, it helps to follow a step-by-step process to avoid making costly mistakes. Start by identifying the best location to buy a house based on your needs and budget.

Once you have a location, you can proceed to check mortgage rates, prepare a down payment, get pre-approval and arrange a home inspection. Your realtor will help you through the process and offer guidance when you need it.

It is important to manage your mortgage properly to avoid penalties. Ensure that you are aware of your payment due dates and, if possible, set up automatic payments to avoid missing payment dates.

Connecticut Homebuying Details

There are many mortgage options available to homebuyers in Connecticut. Buyers can choose from conventional, FHA, VA or USDA loans depending on their background and eligibility. First-time buyers might also be eligible for down payment assistance programs to help cover down payment and closing costs.

1
Homebuyer Mortgage Program

First-time homebuyers or those buying homes in target areas are eligible for this program, which offers below-market interest rates and down payment assistance.

2
Down Payment Assistance Program (DAP) Loan

This loan is offered by the Connecticut Housing Finance Authority at low interest rates of 1.00% to 1.50% APR. This program offers assistance of up to $20,000.

3
Assistance programs by city

Some cities in Connecticut have their own assistance programs for homebuyers, including Fairfield and Hartford.

Frequently Asked Questions About Buying a Home in Connecticut

You can learn more about how to buy a house in Connecticut with MoneyGeek’s answers to frequently asked questions.

What are the most important questions to ask when buying a house in Connecticut?
Is buying a house in Connecticut a good idea?
Is it wise to buy a house in Connecticut in 2023?
How much income do I need to buy a house in Connecticut?
How much is property tax in Connecticut?
Which Connecticut city is the cheapest to buy a home?
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