What to know about Mississippi mortgage rates

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Mississippi offers a low cost of living world-class fishing and outdoor activities from the Appalachian foothills to the beaches of the Mississippi Gulf Coast.

Nearly 3 million people call Mississippi home. 

If you’re searching for a home in Mississippi, remember to shop around and compare mortgage rates. What may seem like a small difference could add up to thousands over the course of a 15-year or 30-year mortgage.

Mortgage debt in Mississippi

Credit Karma members with mortgages in Mississippi had average mortgage debt of $128,956 in 2020 and average monthly mortgage payments of $1,006.

That puts Mississippi a good bit below average for both mortgage debt and average monthly mortgage payments compared to Credit Karma members across the U.S. in 2020. 

Types of home loans

If you choose to finance your dream home, you might be overwhelmed with the number of mortgage loan options out there. Here are some of the more common mortgage types Mississippi homeowners may consider.

Conventional loans in Mississippi

Conventional loans are mortgages that aren’t part of government programs. These loans tend to be good for people with solid credit and a down payment of at least 3% to 5%.

Mississippi FHA loans

FHA loans are a good option for first-time homebuyers to explore — particularly if your credit is less than perfect. That’s because you may be able to qualify with credit scores as low as 580 with a 3.5% down payment or 500 with a down payment of 10%. This FICO® score requirement is the FHA minimum standard. In general, additional lender credit score requirements may apply.

The FHA loan limit in 2021 is generally $356,352 for a one-unit property, but it can reach as high as $822,375 depending on where you live.

 Every area in Mississippi conforms to the FHA loan limit of $356,362 in 2021. 

You can find the exact limit by county on the U.S. Department of Housing and Urban Development website.

VA loans in Mississippi

If you’re an eligible veteran or service member comparing mortgage rates in Mississippi, a VA loan can be attractive since down payments and mortgage insurance typically aren’t required by the VA and you may be able to qualify even if your credit isn’t great. 

Similar to FHA loans, VA loans are insured by the federal government but issued by private lenders.

Conforming loan limits in Mississippi

Conforming loans are a type of home loan that meets certain loan limits set by the Federal Housing Finance Agency. This means they can be bought by Fannie Mae and Freddie Mac, federal-government-sponsored enterprises that guarantee mortgages.

Loans that exceed conforming loan limits are known as jumbo loans. Lenders often consider these loans riskier than conforming loans. 

All of Mississippi’s counties have a conforming loan limit of $548,250 in 2021.

First-time homebuyer programs in Mississippi

If you’re hoping to buy your first home, there may be some assistance programs available to you in Mississippi.

  • MHC Smart Solution Mortgage: For first-time and other homebuyers, the Mississippi Home Corporation (MHC) says it offers 30-year mortgages at “competitive” rates and with reduced mortgage insurance premiums through its Smart Solution Mortgage program. Mortgage options include Freddie Mac (up to 97% financing), FHA, VA and USDA home loans. To qualify, you must have a minimum credit score of 640 and have a household annual income of no more than $95,000. 
  • MHC Mortgage Revenue Bond 7 program: This program is for first-time homebuyers and those who wish to purchase a home in a targeted area. It offers a 30-year fixed rate mortgage with up to $7,000 in a deferred, forgivable 10-year second mortgage to be applied to eligible closing costs. If you’d like to take advantage of this program, you must meet certain income and purchase price requirements, which vary by county, and applicable loan credit requirements. 
  • MHC Smart Solution Second program: MHC Smart Solution Second is for those who get a mortgage through the MHC Smart Solution program. It offers a 4.5% down payment as a second mortgage. The second mortgage is a 10-year loan with the same interest rate as the first mortgage. 

Mortgage refinancing rates in Mississippi

If you’re thinking about refinancing your mortgage, keep a few things in mind:

  • Break-even cost: Once you know the closing costs for your refinance, you can use any savings on your monthly mortgage payment to calculate how long it will take you to recoup that investment and “break even.”
  • Cash-out refinance: Have you accumulated equity in your home that you’d like to convert to cash? A cash-out refinance lets you refinance your home for more than what you owe and get cash in return. But remember that you’ll owe the full amount plus interest and the equity in your home will be less if you sell in the future.  

Loan term: You also may want to either shorten or extend your loan term. For instance, if you have a 30-year mortgage, you may want to convert it to a 15-year loan. Keep in mind that reducing your term likely means you’re paying more each month — but less in interest over time. Lengthening your loan term may mean you pay less each month, but more interest over the course of the mortgage.

About the author: Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt Un… Read more.