Points of Interest
If you’re interested in buying or refinancing a home in Delaware, there are plenty of perks. This state is located in close proximity to several major cities and the state-sponsored homebuyer assistance programs can make the home financing process less expensive for people who qualify.
Are you looking to buy property in a small town but still be close to major cities like Philadelphia, Baltimore and Washington, D.C.? Delaware will be a great state for you — especially now that interest rates for home loans are near all-time lows. Mortgage rates in Delaware typically trend above the national average, but the median home price falls below that of both New Jersey and Maryland, its neighbors to the north and south.
Getting a mortgage in Delaware
Buying a home in Delaware has never been easier. This tiny state, tucked between Baltimore and Philadelphia, is the perfect escape from the big city without being too far away — and people are taking notice. According to the United States Census Bureau, Delaware has grown its population by 8.4% since 2010.
If you’re looking to make a move, now is the time while mortgage rates in Delaware are still low. You won’t find any state-specific barriers to entering and may even qualify for local down payment assistance depending on which county you buy a house in. Here’s a quick look at what you can expect while househunting in Delaware.
Delaware state mortgage rate trends
In late 2018, 30-year fixed-rate mortgage rates in Delaware peaked at 4.8% on average for people with excellent credit. Since that time, mortgage and refinance rates in Delaware have followed the downward trend seen in the rest of the country, with the current average rate at just 3.8%. Securing a rate this low could be the difference between making just your monthly payments and paying your mortgage off early.
This drop is due, in part, to the Federal Reserve cutting interest rates to nearly zero. While the Fed doesn’t actually set interest rates for home loans, it can dramatically move funds rates up or down depending on the economic outlook, which also has an effect on mortgage rates.
When the Fed recently cut the federal target funds rate to 0% to 0.25%, it became cheaper for banks to lend money to other financial institutions to meet daily reserve requirements. When the banks save money, they often pass those savings on to you in the form of lower interest rates in hopes of attracting your business.
Delaware state current mortgage rates
The rate you’ll get for a mortgage in Delaware depends heavily on your financial history, the size of your down payment and the term of your loan. Rates are extremely low right now across the country and Delaware is no exception. According to historical mortgage data from Freddie Mac, average mortgage rates for a 30-year fixed rate in the U.S. hit 3.31% in April 2020, the lowest point ever.
Mortgage rates in Delaware trend slightly higher than the national average and currently sit at 3.84% for an average 30-year fixed-rate mortgage. You’ll see the biggest savings when looking at a 15-year fixed-rate loan, however. The current average interest rate is only 3.26% for this type of loan.
Most and least expensive places to live in Delaware
Delaware is a small state with only three counties — New Castle in the north, Kent in the middle and Sussex in the South. New Castle County is the most densely populated area, with Wilmington as its hub, which sits only 40 miles from downtown Philadelphia. The cost of living follows the population density in Delaware, with New Castle being the most expensive, followed by Kent and Sussex counties.
New Castle County
New Castle County covers the northern portion of Delaware. It includes Wilmington, the state’s largest city, and sits within the Philadelphia Metropolitan Area. Within the county lie some of Delaware’s most expensive real estate and wealthiest communities, making it the most expensive county to live in. The median home value between 2014 and 2018 was $254,500, with the median household income sitting at $70,996 for the same time period.
Sussex County covers the southern part of Delaware and includes the state’s beautiful beaches along the Atlantic Ocean. Sussex is made up of several small communities, with Milford as the largest town, though only 11,732 people living there. The median home value in Sussex County was $248,900 between 2014 and 2018.
Dover, Delaware’s capital city, is the center of Kent County, Delaware. Kent is the least populated county in the state, with only 180,786 residents as of 2019. You’ll find Kent to be the most affordable area of the state as well, with the median home value sitting at $213,900.
Delaware state mortgage resources and intricacies
Delaware boasts some of the lowest property taxes in the country because it currently bases its tax rates on home values from 1987. This is most likely going to change, however, after a judge ruled in May 2020 that the current system was unconstitutional.
If you want additional resources for buying a home in Delaware, the Delaware State Housing Authority (DSHA) is a great place to start. It offers a Homeownership Loan Program for people with low-to-moderate incomes. While many similar state programs limit their resources to first-time homebuyers, Delaware’s program is open to all homebuyers who qualify.
You can also qualify for downpayment and closing cost assistance through either DSHA, one of Delaware’s counties, or through municipalities and private organizations like First Front Door, which provides up to $5,000 in funding for a down payment and closing costs. Applying for a mortgage in Delaware is very straightforward. Whether you’re buying a house or refinancing, you should contact a lender who will be able to walk through all of the different loan options that you might qualify for.
The final word
Delaware is a small, quiet state with easy access to big cities like Philadelphia, Baltimore and Washington, D.C. The current low mortgage rates in Delaware along with a number of homebuyer programs make it a great place to move if you’re looking to buy a home in the near future.