Home > Mortgages > 10 Cheapest Places to Finance a Home

Comments 0 Comments

A property with an affordable listing price is only part of finding a home within your budget, because if you can’t access low mortgage rates, you may not be able to buy as much house as you hoped.

Your mortgage rate heavily depends on you: your credit score, your ability to repay the loan, your track record with meeting debt obligations and the size of your down payment. At the same time, your mortgage rate is in some ways beyond your control, because unless you’re looking to move to a place where financing is cheap, you’re stuck with the trends in your state. Depending on where you live, that can be good or bad news.

10 States With the Lowest Average Mortgage Rates

To find the most affordable mortgage rates across the U.S., GoBankingRates and RateWatch analyzed interest rates across the country and published their rankings earlier this month. More than half of the states on the low-rate list are located on the East Coast.

Regional markets have an affect on rates, but the price of a home loan depends on the applicant. No matter where you live, if you have terrible credit and can’t show you’re capable of repaying the loan, you’re likely to qualify for much higher mortgage rates than average, assuming you qualify at all. As far as geography goes, here are the 10 states with the lowest average mortgage rates:

10. New Hampshire — 3.649%
9. Minnesota — 3.623%
8. Hawaii — 3.603%
7. Mississippi — 3.599%
6. Massachusetts — 3.597%
5. Maryland — 3.593%
4. Pennsylvania — 3.551%
3. Nevada — 3.459%
2. Connecticut — 3.413%
1. Rhode Island — 3.359%

The weighted averages were calculated from a database including 102,000 15- and 30-year fixed and five-year adjustable-rate mortgage products on July 3. On the opposite end, Nebraska had the highest average rate at 4.102%. The national average was about 3.747%, which is quite low, historically speaking. Fixed mortgage rates peaked at more than 18% in 1981, and pre-recession averages were in the 6% range.

Local rates depend on a few things, like supply and demand, home prices and default risk in the area, but if affordability is your goal, you should focus on your credit. The best interest rates are available to those with the highest credit scores, and because your credit score is based on your credit history, you’ll want to make sure your credit reports are in good shape. (Here’s how to get your credit reports for free.)

Credit scores are based on five main factors: payment history, debt use, average age of accounts, account mix and number of inquiries. Well in advance of house hunting, you should pull your credit reports to make sure they’re accurate, and you should see how you fare in those five categories by reviewing your credit scores regularly. To see how your history affects your credit score, you can review two of your credit scores for free on Credit.com, with updates available every 30 days.

More on Credit Reports and Credit Scores:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team