Homeownership rates in North Carolina match up well with the rest of the U.S. If you're thinking of buying a home in the Tar Heel State, you'll probably need a mortgage — a loan specifically for purchasing property. But before you jump in, remember that the best mortgage for you involves several factors, including the current mortgage rates in North Carolina. Lower figures mean you pay less over the life of your loan, enhancing your homebuying experience. To make the most of your mortgage, compare rates from different lenders to find the best deal possible.
Current Mortgage Rates in North Carolina
In 2022, the national homeownership rate was 65.9%, identical to North Carolina's. It suggests that mortgages are playing their part in helping North Carolinians own their homes. But let's get into the nitty-gritty — how do mortgage rates in North Carolina stack up against the national averages?
Generally speaking, you'll find the best mortgage rates in North Carolina are slightly lower than the U.S. averages. An average 30-year fixed-rate mortgage is 6.99% in North Carolina compared to 7.06% nationwide. A 15-year fixed comes in at 6.27% in the state, just a hair below the national 6.30%. But the most notable difference is in the 5-year adjustable rate mortgage: 7.19% in North Carolina against 7.27% nationally.
Note that these rates can change due to economic conditions, policy decisions and market demand. So, it pays to keep an eye on current rates. Another consideration is the mortgage types available in North Carolina, each with its own rate. It's best to compare your options to make well-informed decisions.
Finding the Best Mortgage Rates in North Carolina
Mortgage rates play a pivotal role in your financial well-being for several reasons. First, securing a lower rate can substantially reduce your monthly payments, allowing you more flexibility in budgeting for other life needs. Second, a favorable rate helps you build home equity more quickly since a higher percentage of your payments goes toward the principal rather than interest. Knowing how to find the best rates can put you ahead in the long-term game of homeownership. Here are several techniques to try:
Go Short-Term if You Can: In North Carolina, the average rate for a 15-year fixed-rate mortgage is 6.27%, while its 30-year counterpart has an average rate of 6.99%. A shorter term can save you interest over the loan's lifespan. For instance, on a $300,000 loan, the difference in interest could amount to tens of thousands of dollars.
Reduce Existing Debt: Lenders look at your debt-to-income ratio to determine your mortgage rate. Pay off high-interest credit cards or auto loans to improve It. For example, paying off a $2,000 credit card balance could positively impact your mortgage rate, leading to long-term savings.
Understand Your Loan-to-Value Ratio: This is the ratio of your loan to the value of the property. The lower the ratio, the better the rate you might get. For example, putting down a 20% down payment instead of 10% could lead to a more favorable rate.
Pay for Points: Consider buying mortgage points upfront. One point typically costs 1% of your mortgage and can reduce your rate by about 0.25%. On a $200,000 mortgage, spending $2,000 could save you thousands over the life of the loan.
Seasonal Timing: Mortgage rates sometimes drop at the start or end of the year. Applying during these periods might get you a lower rate.
With these tips, you're well-equipped to find a rate that meets your needs and enhances your long-term financial health. Remember, the current mortgage rates in North Carolina are not set in stone — proactive steps can make them even more favorable for you.
Mortgage Types in North Carolina
The average home value in North Carolina stands at approximately $321,207, a bit lower than the national average of $349,770. While homes are generally more affordable in the Tar Heel State, a mortgage is still an excellent tool for potential homebuyers. Knowing the average home value can help you understand what kind of loan you'll likely need, which in turn aids in budgeting and planning your future payments.
Fortunately, North Carolina offers a variety of mortgage options to fit your specific needs. Let's dive into some of those prospects.
What It Is
Typical Eligibility Requirements
These loans are not backed by the federal government and are the most common type. They often require a higher down payment and a strong credit score, but they offer more flexibility on property types.
A 20% down payment, 620+ credit score and a stable income.
Insured by the Federal Housing Administration, these loans are popular among first-time homebuyers. They allow for lower down payments and have more lenient credit requirements.
A 3.5% down payment, a 580+ credit score and at least two years of employment history.
The Department of Veterans Affairs backs these loans available to eligible veterans and active-duty service members. They require no down payment and no private mortgage insurance (PMI).
A VA Certificate of Eligibility, a 620+ credit score and proof of income.
The United States Department of Agriculture backs these loans to encourage rural homeownership. They require no down payment and offer reduced mortgage insurance costs.
Must reside in an eligible rural area and provide proof of a stable income with a 640+ credit score.
Exceeding the conforming loan limits that Fannie Mae and Freddie Mac set, jumbo loans are designed for more expensive properties. These loans often have stricter requirements and higher interest rates.
A 20–30% down payment, a 700+ credit score and proof of income.
Knowing your mortgage options is only half the battle. Understanding different rate structures will help you find which type suits your financial situation best. Let's look at the two main options:
Fixed-Rate Mortgages: Your interest rate stays the same throughout the life of the loan. The predictability is great for budgeting, but these loans may start with higher rates than ARMs. They're ideal if you plan to stay in the home long-term.
Adjustable-Rate Mortgages: Your rate can change after a set period, so while you start with a lower figure, you also risk an increase (sometimes, a significant one) later. ARMs may be a better fit if you plan a shorter stay in your home and are willing to roll with rate changes.
You can find the best mortgage deal in North Carolina for your unique needs by marrying the right mortgage type with the ideal rate structure. Whether you're a first-time buyer or looking to refinance, a little knowledge goes a long way in making your mortgage journey smoother.
A tool to help you find the best mortgage structure for you is a mortgage calculator. For example, the one by MoneyGeek allows you to see how different rates, down payments and loan types affect your monthly payments. It's a hands-on way to explore what you can afford and what terms suit you best. Go ahead, plug in some numbers and see what works for you. A little experimenting can save you a lot of guesswork and make your mortgage journey in North Carolina more manageable.
How to Get a Mortgage in North Carolina
Understanding how to secure a mortgage in North Carolina doesn't just make the process smoother — it puts you in the driver's seat. Knowing what to expect allows you to be well-equipped to make wise decisions that can save you time and money. Let's dig into the steps to get you started.
Before you start home shopping, get pre-approved for a mortgage. It shows sellers that you're a serious buyer and helps you understand what you can afford.
It's wise to shop around. Different lenders offer various rates and terms, so get multiple quotes to find the best deal for you.
Choose the Right Mortgage Type
Consider your long-term goals when picking the mortgage type and rate structure that suits you best. Consult with a loan officer if you're unsure.
Submit Your Application
Fill out the mortgage application with all required documents like W-2s, bank statements and identification. Be thorough to avoid delays.
After your application, the lender will require a home appraisal to determine the property's value. This ensures the loan amount matches the home's worth.
Lock In Your Rate
Once approved, your lender will offer a rate. If you're happy with it and current mortgage rates in North Carolina are favorable, lock it in so it doesn't change while you close the deal.
Close the Deal
Finalize your mortgage by signing all the necessary paperwork. Make sure to read everything carefully before putting pen to paper.
You're not just going through the motions when you understand these steps — you're actively securing a mortgage that works for you. Now that you’re better equipped to navigate the mortgage maze in North Carolina, you're more likely to grab a deal that fits your life. It's all about staying informed and taking the right actions at the right time.
Mortgage Programs in North Carolina
Owning a home is exciting, but it's not just the down payment and mortgage rates in North Carolina you have to think about. There are hidden costs like property taxes and home repairs. Fortunately, certain mortgage programs can make homeownership more affordable.
The North Carolina Housing Finance Agency offers programs to help you with your down payment or even reduce mortgage rates. It makes home purchases easier to afford and leaves you with extra money for those unexpected costs that come with being a homeowner.
NC Home Advantage Mortgage
The NC Home Advantage Mortgage program is an ally for both first-time and move-up homebuyers. It offers fixed-rate mortgages with down payment assistance up to 3% of the loan amount. Even better, if you're a first-timer or a military vet, there's an extra $15,000 down payment option. After year 15, you don't have to repay the down payment assistance — it's fully forgiven. With the NC Home Advantage Tax Credit, you can save up to $2,000 on your federal taxes each year.
Eligibility is pretty straightforward. You'll need a 640 credit score, an annual income below $134,000 and you must live in the home within 60 days of closing. The program works for various property types, including single-family homes and condos.
NC 1st Home Advantage Down Payment
The NC 1st Home Advantage Down Payment program aims to offer a financial boost for first-time homebuyers or military veterans in North Carolina. You can get a staggering $15,000 to assist with your down payment if you meet the criteria. It's not just free money; consider it a second mortgage with a 0% interest rate. This 'loan' is forgiven incrementally from year 11 through 15, disappearing entirely by the end of year 15.
You'll need a 640 credit score or above to qualify, and you should be living in your new home within 60 days of closing. The property choices are also versatile, including single-family homes, townhouses and condos. It even extends to new manufactured homes with a 660 credit score requirement. Pairing this program with current mortgage rates in North Carolina could put you in an advantageous position for homeownership.
NC Home Advantage Tax Credit
The NC Home Advantage Tax Credit can make a difference for eligible first-time homebuyers and military veterans in North Carolina. By getting a Mortgage Credit Certificate (MCC), you could save up to $2,000 annually on your federal taxes. For instance, if you pay $6,660 in interest the first year on a $148,000 mortgage, your MCC lets you claim a $1,998 tax credit. You even have the option to adjust your W-4 and boost your monthly paycheck by $167, making room in your budget for mortgage payments.
To get in on this, apply for an MCC at the same time as your mortgage. Make sure you're going to live in your new home within 60 days and that the NC Housing Finance Agency approves your loan. With fluctuating mortgage rates in North Carolina, this credit could be a real asset. Eligible properties include single-family homes, townhouses, and new or used manufactured homes.
Frequently Asked Questions About North Carolina Mortgage Rates
We've compiled the most frequently asked questions borrowers have about current mortgage rates in North Carolina. You'll find comprehensive answers, allowing you to make sounder financial decisions about your mortgage in the Tar Heel State.
About Christopher Boston
- FRED Economic Data. "Homeownership Rate for North Carolina." Accessed September 16, 2023.
- FRED Economic Data. "Homeownership Rate in the United States." Accessed September 16, 2023.
- North Carolina Housing Finance Authority. "Home Page." Accessed September 16, 2023.
- North Carolina Housing Finance Authority. "NC 1st Home Advantage Down Payment." Accessed September 16, 2023.
- North Carolina Housing Finance Authority. "NC Home Advantage Mortgage." Accessed September 16, 2023.
- North Carolina Housing Finance Authority. "NC Home Advantage Tax Credit.." Accessed September 16, 2023.
- Zillow. "North Carolina Home Values." Accessed September 16, 2023.