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Compare mortgage rates in Louisiana.
Key Points
• Mortgage rates in Louisiana are rarely far from the national average.
• Economic factors (inflation, unemployment, Federal Reserve policy) and consumer factors (such as credit score and down payment) influence what rate a homebuyer is offered.
• Louisiana offers a full range of mortgage types, including fixed-rate, adjustable-rate, FHA, VA, USDA, and jumbo loans.
• It’s important to examine not only interest rates but also lender fees before deciding on a loan.
• There are many cities in Louisiana where home prices are well below the national average.
Introduction to Mortgage Rates
Louisiana’s mortgage rates are influenced by various economic and consumer factors. Understanding these factors and comparing interest rates and fees from multiple lenders is crucial for securing a competitive mortgage rate and saving money over the life of a loan.
Mortgage interest rates are calculated using a complex combination of factors, which can be broadly categorized into two buckets: the state of the economy and the state of the borrower’s personal finances. Economic factors include the Federal Reserve’s interest rates, while consumer factors include credit score, down payment, income and assets, and the type of mortgage loan a borrower chooses.
Where Mortgage Rates come From
The Federal Reserve, also known as the Fed, sets the short-term interest rates that banks use as a benchmark for their own lending rates. Although home loan rates are not directly governed by the Fed, they generally follow the same trends.
How Interest Rates Affect Home Affordability
When the Fed’s interest rate is high, chances are mortgage rates will be too. However, it’s important to note that mortgage rates are influenced by a multitude of factors, and the Fed’s decisions are just one piece of the puzzle.
Mortgage rates have a significant impact on home affordability, often more than people realize. Even small changes in interest rates can make a big difference in monthly mortgage payments and the overall cost of a home. For example, a 1% increase in interest rate on a $360,000 mortgage can add $231 to the monthly payment and more than $80,000 to the total interest paid over the life of the loan.
As a result, it’s crucial for homebuyers to carefully consider current mortgage rates and their impact on affordability when making a home purchase decision.
Should Homebuyers Wait for Interest Rates to Drop?
Many homebuyers — and especially those buying a first home — wonder if they should buy now or wait for interest rates to come down. While it’s impossible to predict the future, there are a few factors to consider when making this decision.
First, it’s important to remember that mortgage rates are cyclical and have historically fluctuated over time. But home prices fluctuate too. Waiting for rates to drop may mean missing out on the opportunity to purchase a home at a favorable price. Delaying the purchase also delays building equity in a home.
Another factor: Homeowners can always refinance their mortgage after rates come down, allowing them to take advantage of lower rates in the future. By carefully evaluating their financial situation and considering the current market conditions, homebuyers can make an informed decision about whether to purchase a home now or wait for interest rates to drop.
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Louisiana Mortgage Rate Trends
Understanding historical mortgage rates can provide some insight into the current mortgage rates in Louisiana. The chart below suggests that current rates may be similar to those seen in the past (the Federal Housing Finance Agency stopped tracking these state rates in 2018).
| Year | Louisiana Rate | U.S. Rate |
|---|---|---|
| 2000 | 7.89 | 7.86 |
| 2001 | 6.86 | 7.03 |
| 2002 | 6.43 | 6.62 |
| 2003 | 5.65 | 5.83 |
| 2004 | 5.75 | 5.95 |
| 2005 | 5.94 | 6.00 |
| 2006 | 6.54 | 6.60 |
| 2007 | 6.51 | 6.44 |
| 2008 | 6.10 | 6.09 |
| 2009 | 4.99 | 5.06 |
| 2010 | 4.81 | 4.84 |
| 2011 | 4.46 | 4.66 |
| 2012 | 3.67 | 3.74 |
| 2013 | 3.84 | 3.92 |
| 2014 | 4.13 | 4.24 |
| 2015 | 3.89 | 3.91 |
| 2016 | 3.72 | 3.72 |
| 2017 | 4.12 | 4.03 |
| 2018 | 4.55 | 4.57 |
Historical U.S. Mortgage Rates
Looking at several decades of historical mortgage rates shows that rates fluctuate, but have generally declined from a peak in the 1980s. So if you’re feeling like rates are higher than ever, taking a closer look can give you a different perspective.
Factors Affecting Mortgage Rates in Louisiana
Numerous factors influence mortgage rates in Louisiana and nationwide. Some of these factors are economic, while others are entirely within the homebuyer’s control.
By understanding these factors, homebuyers can take steps to improve their chances of securing a competitive mortgage rate.
As noted above, economic factors include the Federal Reserve’s interest rate and consumer factors include credit score, down payment, income and assets, and type of mortgage loan. Let’s take a closer look.
Economic Factors
In addition to economic factors, several consumer factors also affect mortgage rates. These factors include:
• The Fed: The Federal Reserve sets the federal funds rate, which serves as a benchmark for other interest rates, including mortgage rates. When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money, which in turn leads to higher mortgage rates.
• Inflation: When inflation rises, the purchasing power of money decreases, making it more expensive for lenders to lend money. Lenders may increase interest rates to compensate.
• Unemployment rate:A high unemployment rate typically signals the Fed to notch interest rates down in an effort to prompt job creation. Mortgage rates then tend to fall.
Consumer Factors
• Credit score:A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders. Borrowers with higher scores typically receive lower mortgage interest rates.
• Down payment:The amount of down payment a borrower makes can also impact the mortgage interest rate. A larger down payment reduces the loan amount, which in turn curbs the risk for the lender. This is why borrowers who make a larger down payment often receive lower mortgage interest rates.
• Income and assets: A steady income and sufficient assets, which serve as a safety net in case of financial trouble, are also important factors that lenders consider.
• Type of mortgage loan: Certain types of loans, such as adjustable-rate mortgages (ARMs) and government-backed loans, often have lower interest rates compared to conventional fixed-rate mortgages.
Types of Mortgages Available in Louisiana
Homebuyers in Louisiana have access to a variety of mortgage types, each with its own unique features and benefits. These include:
Fixed-Rate Mortgage
A fixed-rate mortgage offers stability and predictability, in the form of a constant interest rate throughout the entire loan term. This type of mortgage is ideal for borrowers who prefer a predictable payment and want to lock in a favorable interest rate.
Most people who choose a fixed-rate mortgage opt for a 30-year term, although shorter terms are available. The longer the loan term, the lower the monthly payments, but the more interest paid over the life of the loan.
Adjustable-Rate Mortgage (ARM)
An ARM offers flexibility with an initial lower interest rate that can adjust periodically based on market conditions. This type of mortgage can be beneficial for borrowers who plan to sell or refinance their home before the initial fixed-rate period ends. Not knowing what the rate will adjust to might be stressful for homebuyers who don’t thrill to unpredictability.
FHA Loan
An FHA loan, backed by the Federal Housing Administration, offers more flexible eligibility requirements compared to conventional loans. This type of loan is ideal for those who qualify as a first-time homebuyer or borrowers with less-than-perfect credit, because FHA loans allow for a smaller down payment and lower credit scores. However, FHA loans do come with mortgage insurance, which adds to the overall cost of the loan.
VA Loans
VA loans, offered by the Department of Veterans Affairs, provide excellent benefits to eligible veterans, active-duty military members, and certain surviving spouses. These loans offer competitive interest rates and do not require a down payment.
VA loans do have specific eligibility requirements, such as a minimum length of military service. That’s why the first step if you’re interested in exploring a VA loan is to apply for a Certificate of Eligibility (COE).
USDA Loans
USDA loans, backed by the U.S. Department of Agriculture, are designed to assist borrowers whose incomes fall below specific limits in purchasing homes in rural areas. These loans offer competitive interest rates and do not require a down payment.
Jumbo Loan
Jumbo loans are conventional loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). In Louisiana, if you’re buying a single-family home and need a loan that exceeds $806,500, you’ll be applying for a jumbo loan. Jumbo loans offer competitive interest rates and flexible terms, but they may require a larger down payment and have stricter credit requirements compared to conventional loans.
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Popular Places to Get a Mortgage in Louisiana
Securing a mortgage often depends on choosing the right location, where home prices are affordable and mortgage terms are favorable. When considering different locations, it’s important to evaluate factors such as cost of living, job opportunities, and the local housing market.
Cost of living plays a significant role in determining mortgage affordability. Louisiana offers a relatively low cost of living compared to many other states, making it an attractive option for homebuyers seeking affordability.
Here are some popular places to get a mortgage in Louisiana:
Least Expensive Locations
Some of the least expensive places to get a mortgage in Louisiana, according to SoFi’s list of best affordable places in the U.S., include:
• Abbeville: The average Abbeville home value is $136,696, according to Zillow, and has been declining in the last year.
• Zachary: The average Zachary home value is $266,451, more than Abbeville but well under the U.S. national average of $361,282.
• Jennings: An average home value of $117,682 makes Jennings an affordable place to buy.
• Bastrop: It’s rare to find a market with homes at an average value below $100,000, but Bastrop comes in at $82,545.
• Monroe: Homes here are valued at an average of $140,495.
Most Expensive Locations
Some of Louisiana’s higher-priced homes are found in its larger cities, New Orleans and Metairie. The cost of living in New Orleans is the highest of any city in the state, at 24% above the state average. The average home value here is $237,512, and has dropped 7% over the past year, according to Zillow — so homes in New Orleans are still, on average, relatively affordable. In the upscale suburban area of Metairie, where the cost of living is 16% above the state average, the average home value is $282,001.
Tips for Securing a Competitive Mortgage Rate in Louisiana
As we’ve seen, securing a competitive mortgage rate can save you thousands of dollars over the life of your loan. Here are some tips to help you get the best possible mortgage rate in Louisiana:
Compare Interest Rates and Fees
Don’t settle for the first mortgage offer you receive. Take the time to compare interest rates and fees from multiple lenders (fees can vary significantly between lenders).
Get Preapproved
Getting preapproved for a mortgage strengthens your position as a buyer and allows you to move quickly when you find the right property. It also gives you a better idea of how much you can afford to borrow.
When you go through the mortgage preapproval process and emerge with an approval letter, the lender has verified your income, assets, and credit history, making the mortgage process more efficient and reducing the risk of delays.
Louisiana Mortgage Resources: Assistance for Homebuyers
Louisiana offers resources and programs to assist homebuyers, particularly first-time buyers and those with limited financial resources. Programs often come with counseling and education to help buyers achieve their homeownership goals.
First-Time Homebuyer Programs
Louisiana’s DDelta 100 program provides up to 100% financing and up to 3% closing cost and prepayment assistance to eligible homebuyers who lack traditional credit.
Down Payment Assistance
Down payment assistance programs can help homebuyers overcome the challenge of saving for a down payment. In Louisiana, the Mortgage Revenue Bond program helps first-time homebuyers with a credit score of at least 640, and others who buy within targeted areas, to fund a down payment and closing costs.
Tools & Calculators
SoFi provides online tools and calculators to help homebuyers estimate their monthly mortgage payments, resources to determine their eligibility for assistance programs and compare different loan options. These resources can empower homebuyers to make informed decisions throughout the homebuying process.
Run the numbers on your home loan.
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Mortgage calculator
Punch in your home loan amount and a new interest rate, and we’ll estimate your payoff date.
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Down payment calculator
Enter a few details about your home loan and we’ll provide your monthly mortgage payment.
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Home affordability calculator
Provide us with a few details and see how much you can afford to spend on a home purchase.
Using the free calculators is for informational purposes only, does not constitute an offer to receive a loan, and will not solicit a loan offer. Any payments shown depend on the accuracy of the information provided.
Refinancing Options in Louisiana
Homeowners in Louisiana have options for a mortgage refinance. These include:
• The FHA Streamline Refinance program allows homeowners with FHA-insured loans to refinance into lower interest rates without the need for a new credit check or appraisal. This can be a convenient and cost-effective way to reduce monthly mortgage payments.
• The Interest-Rate Reduction Refinance Loan (IRRRL) program allows veterans and active-duty military members with VA loans to refinance into lower interest rates. This program offers streamlined refinancing with minimal documentation and may not even require an appraisal.
• A Cash-out Refinance allows homeowners who have built up substantial equity to refinance and take out cash to use for another project, such as a kitchen remodel or a child’s college education.
Closing Costs, Taxes, and Fees in Louisiana
Purchasing a home in Louisiana means paying closing costs, taxes, and fees associated with the transaction. These costs can vary depending on the purchase price of the home and the lender.
Closing costs typically include loan origination fees, appraisal fees, title insurance, and other administrative fees. It’s important to factor these costs into your budget when planning for a home purchase
The Takeaway
Louisiana’s mortgage landscape offers many options for homebuyers. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, you can make strategic decisions that align with your financial goals and be a happy homeowner in Louisiana.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
Will mortgage rates drop in Louisiana?
It is difficult to predict future mortgage rate trends with certainty. Mortgage rates are influenced by several economic factors, including the Federal Reserve’s interest rates, inflation, and unemployment rates.
Will mortgage rates ever go back to normal?
There isn’t really a “normal” for mortgage rates, which can vary over time and are influenced to a great deal by each person’s own financial picture.
Will Louisiana home prices ever drop?
Predicting future home price trends is uncertain. Home prices are influenced by various factors such as supply and demand, economic conditions, and local market dynamics. While home prices have experienced fluctuations in the past, there is no guarantee that they will drop in Louisiana.
Is it a good time to buy a house in Louisiana?
A good time to buy in Louisiana is when you need to move. Maybe your apartment lease is up. Or a new baby is on the way. Focus on what is right for your personal situation. Consult with a local real estate professional who has their finger on the pulse of the market to gain valuable insights.
How do I lock in a mortgage rate?
Your lender can help you lock in an attractive mortgage rate, typically for a small cost based on your overall loan amount. This can provide peace of mind and protect you from potential rate increases for a period of 30, 60, or even 120 days.
How do mortgage interest rates work?
Mortgage interest rates are determined by various factors, including the Federal Reserve’s interest rates, inflation, unemployment rates, and the borrower’s credit score, down payment, income, and type of mortgage loan. Lenders use the personal financial factors to assess the risk associated with lending money and set interest rates accordingly.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article. Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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More home loan resources.
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First-Time Homebuyer Guide
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First-Time Homebuyer Programs and Loans
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Mortgage Preapproval Process