Compare mortgage rates in Wisconsin.

Introduction to Mortgage Rates

Mortgage rates are determined by a combination of economic factors and the borrower’s financial status. Understanding these factors is essential for navigating the mortgage process and making informed decisions about homeownership.

Economic indicators, such as inflation, unemployment rate, and Federal Reserve interest rates, play a significant role in shaping mortgage rates. Additionally, the borrower’s credit score, down payment, income, assets, and type of mortgage loan all influence the interest rate offered by lenders.

Where Do 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. While home loan rates are not directly tied to Fed rates, they tend to follow similar economic trends.

When the Fed raises interest rates, it becomes more expensive for banks to borrow money. As a result, banks pass on this increased cost to consumers in the form of higher interest rates on loans, including mortgages. Conversely, when the Fed lowers interest rates, borrowing becomes cheaper, leading to lower mortgage rates for consumers.

How Interest Rates Affect Home Affordability

Mortgage rates have a significant impact on home affordability, often more than people realize. Even small changes in interest rates can make a substantial difference in monthly mortgage payments and the overall cost of homeownership.

The average home value in Wisconsin is $307,000. Assuming you make a 20% down payment of $61,400, you’ll need a mortgage for $245,600. At a 5.5% interest rate, your monthly payment is $1,394. If the interest rate increases by just one percentage point to 6.5%, the monthly payment jumps to $1,552 – a difference of $158 per month or almost $1,900 per year.

This may not be a dealbreaker for all homebuyers. But some might find their mortgage application rejected due to insufficient income or assets.

Should Homebuyers Wait for Interest Rates to Drop?

If you’re buying your first home, you may be grappling with the decision of whether to buy now or wait for interest rates to come down. While it’s tempting to wait for a more favorable rate, there are important considerations to keep in mind.

Timing the market is notoriously difficult, and there’s no guarantee that interest rates will drop in the future. Waiting for a potential rate decrease may mean missing out on the opportunity to purchase a home at the current market price. Even if rates do drop, the overall cost of the home may have increased, offsetting any savings from a lower interest rate.

Homeowners who are concerned about rising interest rates should remember they have the option of a mortgage refinance in the future if and when rates are more favorable. Refinancing involves taking out a new loan with a lower interest rate to replace the existing mortgage. This strategy allows homeowners to lock in a lower rate and reduce their monthly payments, potentially saving thousands of dollars over the life of the loan.

Wisconsin Mortgage Rate Trends

Understanding historical mortgage rate trends can provide valuable insights into where rates are headed. While rates have risen in recent years, they remain below historical highs and are currently around the 50-year average.

Historical Interest Rates in Wisconsin

Understanding historical mortgage rate trends can provide valuable insights into where rates are headed. While rates have risen in recent years, they remain below historical highs and are currently around the 50-year average.

Historical U.S. Mortgage Rates

To provide a broader context, here’s a brief overview of historical U.S. mortgage rates:

•   1980s: Rates peak at 18.00% in 1981 and remain high throughout the decade, averaging around 12.00%.

•   1990s: Mortgage rates begin to decline, reaching an average of around 7.00% by the end of the decade.

•   2000s: Rates continue to decline, reaching historic lows in the early 2000s, with an average of around 4.00%.

•   2010s: Rates remain relatively low, hovering around 4.00% for much of the decade.

•   2020s: Mortgage rates have risen in recent years, but remain below historical highs.

Factors Affecting Mortgage Rates in Wisconsin

Numerous factors influence mortgage rates in Wisconsin and nationwide. Some of these factors are economic, while others are entirely within the homebuyer’s control. Understanding these factors is crucial for making informed decisions about securing the best possible mortgage rate.

Economic Factors

Economic factors play a significant role in determining mortgage rates. These factors include:

•   The Fed: The Federal Reserve sets the federal funds rate, which influences the cost of borrowing for banks. When the federal funds rate is high, banks charge higher interest rates on loans, including mortgages. Conversely, a lower federal funds rate leads to lower borrowing costs and potentially lower mortgage rates.

•   Inflation: Inflation, or the general increase in prices, affects the value of money and the cost of borrowing. When inflation is high, lenders may increase interest rates to protect the value of their loans. This is because inflation erodes the purchasing power of money, making it more expensive for lenders to recoup their investment.

•   Unemployment rate: A low unemployment rate generally signifies a healthy economy with more people employed and earning incomes. This increased economic activity often leads to higher demand for housing, which in turn can drive up home prices and put upward pressure on mortgage rates.

Consumer Factors

This is the important part for homeowners looking for lower mortgage rates. Several consumer factors influence mortgage rates:

•   Credit score: A credit score is a numerical representation of an individual’s credit history and repayment behavior. Lenders use credit scores to assess the risk associated with lending money to a particular borrower. A higher credit score indicates a lower risk of default, making borrowers more attractive to lenders and resulting in lower interest rates. Conventional mortgages typically require a credit score of 620 or higher.

•   Down payment: A larger down payment reduces the amount of money the borrower needs to borrow, which lowers the risk for the lender. As a result, lenders may offer lower interest rates to borrowers who make larger down payments.

•   Income and assets: Lenders carefully evaluate a borrower’s income and assets to assess their ability to repay the loan. A steady income and sufficient assets provide assurance to lenders that the borrower can meet their financial obligations, leading to more favorable interest rates.

•   Type of mortgage loan: Different types of mortgage loans have their own baseline interest rates. For example, adjustable-rate mortgages (ARMs) often start with lower rates compared to fixed-rate mortgages. Government-backed loans, such as VA loans, may also offer lower rates. Additionally, shorter loan terms typically come with lower interest rates than longer terms.

Types of Mortgages Available in Wisconsin

Wisconsin offers a diverse range of mortgage types to meet the needs of different homebuyers. These include fixed-rate mortgages, adjustable-rate mortgages, FHA loans, VA loans, and USDA loans.

Conventional loans, which are not backed by government agencies, offer flexibility in terms of interest rates and loan amounts. They can be fixed-rate or adjustable-rate.

Fixed Rate Mortgage

A fixed-rate mortgage offers a consistent interest rate throughout the life of the loan, providing stability and predictability in monthly payments.

With a fixed-rate mortgage, borrowers can lock in a specific interest rate at the time of the loan origination. This ensures that their monthly mortgage payments will remain the same for the entire loan term, regardless of fluctuations in market interest rates.

Fixed-rate mortgages are typically available in terms of 10, 15, 20, or 30 years. The choice of loan term impacts the monthly payment amount and the total interest paid over the life of the loan.

Adjustable Rate Mortgage

An adjustable-rate mortgage (ARM) offers a lower initial interest rate that can adjust periodically based on market conditions.

ARMs start with a lower interest rate compared to fixed-rate mortgages, making them attractive to borrowers who are budget-conscious in the short term. However, it’s important to understand that the interest rate can increase over time, potentially leading to higher monthly payments in the future.

In most cases, an ARM rate will be fixed for three, five, seven, or 10 years and then periodically adjust. If you see a 7/6 or 10/6 ARM, that means the rate on the home loan can adjust every six months after the introductory period.

FHA Loan

FHA loans, insured by the Federal Housing Administration, are designed to make homeownership more accessible to borrowers with limited resources.

FHA loans offer more flexible credit and income requirements compared to conventional loans. This makes them a viable option for first-time homebuyers or individuals with less-than-perfect credit.

One drawback is that FHA loans require an upfront mortgage insurance premium (MIP) of 1.75% of the base loan amount, as well as monthly MIP for new homebuyers — most often 0.55%. For the average priced home in the scenario above, that’s $4,298 upfront, and $112 monthly for the life of the loan.

VA Loan

VA loans, offered by the Department of Veterans Affairs, are available to veterans, active-duty military members, and eligible surviving spouses.

VA loans are a benefit offered to veterans and certain military personnel as a token of appreciation for their service. These loans provide favorable terms, including competitive interest rates and no down payment requirement.

Borrowers obtain these loans from private lenders after first requesting a certificate of eligibility from the VA.

USDA Loan

USDA loans, backed by the U.S. Department of Agriculture, are designed for low-income borrowers seeking to purchase homes in rural areas.

USDA loans cater to individuals and families with modest incomes who are interested in purchasing homes in rural or suburban areas. These loans offer competitive interest rates and flexible credit requirements.

Jumbo Loan

Conventional loans have a maximum loan amount set by the FHFA, which is currently $832,750 for a single-family home in Wisconsin. Jumbo loans are used to finance properties that exceed this limit.

Popular Places to Get a Mortgage in Wisconsin

When deciding where to live, house hunters tend to weigh the cost of living, housing prices, quality schools, and cultural amenities. By carefully considering these factors, homebuyers can make informed decisions about where to set down roots.

While the overall cost of living in Wisconsin is about 10% lower than the national average, it varies significantly across different cities and towns. The Cost of Living Index (COLI) provides a comparison of the cost of living in different locations relative to the average cost of living in the U.S. Values above 100 indicate more expensive areas, while values below 100 point to more affordable locations.

Least Expensive Locations

Based on SoFi’s guide to the Best Affordable Places in the U.S., some less expensive locations in Wisconsin include:

•   Green Bay: COLI 86; average home value $256,000

•   La Crosse: COLI 92; $253,000

•   Milwaukee: COLI 104; $205,000

Most Expensive Locations

Some of the most expensive locations in Wisconsin include:

•   Brookfield: COLI 107.3; $476,000

•   Madison: COLI 103.4; $391,000

•   Oconomowoc Lake: COLI 107.3; $489,000

Tips for Securing a Competitive Mortgage Rate in Wisconsin

Obtaining a competitive mortgage rate can save borrowers tens of thousands of dollars over the life of the loan. Here are some tips for securing the best possible rate in Wisconsin:

Compare Interest Rates and Fees

To secure the best mortgage rate, it is crucial to compare interest rates and fees from multiple lenders.

•  Shop around: Obtain quotes from several lenders, including banks, credit unions, and online lenders.

•  Consider all costs: In addition to the interest rate, factor in other costs associated with the loan, such as closing costs, discount points, and origination fees.

•  Negotiate: Don’t hesitate to negotiate with lenders for a lower interest rate or reduced fees.

How to 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. Be aware that the mortgage preapproval process can take up to 10 days.

•  Get a preapproval letter: A preapproval letter from a lender specifies the maximum loan amount you are eligible for and enhances your credibility as a buyer.

•  Lock in your rate: If you’re concerned about rising interest rates, you can pay a fee to the lender to lock in your rate for up to 90 days.

Wisconsin Mortgage Resources: Assistance for Homebuyers

Wisconsin offers various resources and programs to assist homebuyers, particularly those with limited financial resources. The WHEDA Advantage Conventional Loan offers eligible buyers a reduced interest rate when buying in certain rural counties. You do not have to qualify as a first-time homebuyer, but the property must be owner-occupied for the life of the loan.

Down Payment Assistance

Down payment assistance programs can help homebuyers overcome the challenge of saving for a down payment.

•  The WHEDA Easy Close DPA provides a 10-year fixed-rate second mortgage with monthly payments. Assistance ranges from $1,000 up to 6% of the purchase price of a home when partnered with a WHEDA conventional first mortgage loan.

•  WHEDA Capital Access DPAis a 30-year 0% interest loan with no payments required.

Tools & Calculators

Various online tools and calculators can help homebuyers estimate their mortgage payments and make informed decisions.

Refinancing Options in Wisconsin: Exploring Your Possibilities

Homeowners in Wisconsin have the option to refinance their existing mortgage to secure a lower interest rate or access cash.

•  Conventional Refinance: Refinancing replaces an existing mortgage with a new one, ideally with different terms and a lower interest rate.

•  FHA Streamline Refinance: FHA Streamline Refinance allows FHA-insured homeowners to refinance into current mortgage rates with minimal hassle.

•  Interest-Rate Reduction Refinance Loan: An Interest-Rate Reduction Refinance Loan can reduce the monthly payments on VA loans by adjusting the APR.

Closing Costs and Fees in Wisconsin: What to Expect

When purchasing a home in Wisconsin, buyers can expect to pay various closing costs, taxes, and fees.

•  Closing costs: Buyers in Wisconsin can expect to pay between 2% and 5% of the home’s purchase price in closing costs. These costs may include appraisal fees, title insurance, loan origination fees, and more.

•  Property taxes: Property taxes in Wisconsin vary by county and municipality. Homebuyers should research the property tax rates in their chosen area to factor these costs into their budget.

•  Transfer taxes: Wisconsin imposes a real estate transfer fee of $0.30 per $100 of the purchase price. However, the seller is usually responsible.

The Takeaway

Wisconsin offers a range of options for homebuyers of different means and financial goals. By staying informed about current mortgage rates, exploring assistance programs, and carefully considering refinancing options, individuals can make strategic decisions that align with their financial goals and achieve successful homeownership in America’s Dairyland.

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 Wisconsin?

Predicting future mortgage rate trends is challenging due to the influence of many economic factors. However, homebuyers can monitor market conditions, such as inflation, unemployment rate, and Federal Reserve interest rate decisions, to make informed decisions about when to purchase a home or refinance a mortgage.

Will mortgage rates ever go back to normal?

The definition of “normal” mortgage rates varies over time. Historically, mortgage rates have fluctuated, and there is no guarantee that they will return to any specific level. Homebuyers should focus on securing the best possible rate available at the time of their purchase or refinance.

Will Wisconsin home prices ever drop?

Wisconsin home prices are already below the national average, as is the cost of living. While prices may drop in the future, don’t let that stop you from house hunting if you’re ready to make a move.

Is it a good time to buy a house in Wisconsin?

The decision of whether to buy a house in Wisconsin depends on individual circumstances, financial readiness, and long-term housing goals. There is no one-size-fits-all answer, and market conditions can change over time.

How to lock in a mortgage rate?

Locking in a mortgage rate involves securing the interest rate offered by a lender for a specific period. This can be done by obtaining a rate lock agreement, which typically comes with a fee.

How do mortgage interest rates work?

Mortgage interest rates are determined by various factors, including the prevailing economic conditions, the Federal Reserve’s monetary policy, and the lender’s risk assessment of the borrower. They impact the monthly mortgage payments and the total cost of borrowing.

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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.

†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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