Find the Best Mortgage Lenders in Madison, WI

Different types of home loans in Madison

Choosing a mortgage is almost as important as finding the right home. That’s because the features of your loan, including its interest rate and term length, play a massive role in the overall cost of your house.

Finding the best rate on a mortgage starts with choosing the right type of home loan. There are a few different options available to you, depending on your situation. For example, a military family stationed near Truax Field Air National Guard Base may choose a different loan than a family purchasing their second vacation home along Lake Mendota. Here are the most common options:

• Conventional mortgages: A conventional home loan is a mortgage offered by a private lender, like a bank or credit union. Lenders typically have more flexibility with conventional mortgages than with some of the other types of loans, but they usually come with slightly higher rates, too. That’s why this type of financing is often better for people who don’t need the qualification benefits of a government-insured mortgage.
• Government-insured mortgages: A government-insured mortgage is a type of home loan that is partially backed by the federal government. These loans are designed to help low- to moderate-income families qualify for loans that they may have otherwise been denied. Common examples of these loans are Federal Housing Administration loans, U.S. Department of Agriculture loans and Department of Veterans Affairs loans. FHA loans are popular with recent University of Wisconsin-Madison graduates, for example, because they have very low down payment options.
• Adjustable-rate mortgages: An adjustable-rate mortgage includes a low, introductory rate that can make buying a home more affordable for some buyers. However, after the first few years, the rates begin to change periodically. Usually, this means rates go up, but it depends on the situation and the market. These are a better option for people who need more flexibility when they first buy a home but expect to be more stable later down the road, like young couples.
• Fixed-rate mortgages: A fixed-rate mortgage offers a set interest rate for the entirety of the loan term. While its rates might be slightly higher than the introductory rates of an ARM, a fixed-rate home loan offers more stability and consistency than other options.
• Jumbo loans: For homes over a certain price, a jumbo mortgage is necessary. According to the Federal Housing Finance Agency, that price limit is $510,400 in Dane County at the time of publishing. Because homes can be over this amount in some parts of the city, jumbo loans are somewhat common in Madison.

Keep in mind that these terms aren’t all mutually exclusive. That means you can have a conventional loan with either fixed or adjustable rates, for example.

Madison house prices

Madison has a very hot real estate market, with a median house price of $288,077. However, home prices in Madison range anywhere from around $160,000 in Darbo-Worthington to $3.4 million off Lake Mendota.

Here are some examples of median home prices in Madison by neighborhood:

• Meadowood: $250,803
• Tenney-Lapham: $354,784
• Middleton: $408,254
• Vilas: $560,557
• Shorewood Hills: $745,843

Homes along the lake or near the UW–Madison campus have much higher property costs than those south or west of town, too. With a relatively low cost of living matched with growing job potential, younger professionals are starting to move to the city or stay after they graduate. This means popular neighborhoods, like Tenney-Lapham and Willy Street, are only continuing to grow.

Madison home loan FAQ

How can I get low mortgage rates in Madison?

At the time of publishing, Wisconsin mortgage rates typically fall between 3.08% and 3.5%, according to S&P Global. Low mortgage rates usually go to borrowers who have excellent credit scores of 720 or above, so consider improving your credit before you apply. If you need a loan now, compare offerings from different lenders to make sure you get the right type of mortgage. Other factors that can get you a lower interest rate include a higher down payment and purchasing mortgage points.

If you’ve tried all of this and still are experiencing high mortgage rates, you could ask someone with a great credit score to cosign on your loan. Their strong financial position can help you qualify for a better rate, but they will share the burden of your mortgage.

What is a 5/1 ARM mortgage?

A 5/1 adjustable-rate mortgage is a type of mortgage that has a fixed interest rate for the first five years but adjustable rates thereafter. The adjustable rate is determined by an index and can be higher or lower than what was on the initial period. However, an increased rate is more common.

Do multiple mortgage inquiries affect my credit score?

Not if they are done within 45 days. Because credit report companies know you probably aren’t going to buy multiple homes, they allow you to complete multiple mortgage inquiries within a 45-day period that all count as one singular credit pull. The effect of a single credit pull on your score is usually negligible.

Can you negotiate a fixed-rate mortgage?

Yes, you can negotiate a fixed-rate mortgage. Mortgage companies are trying to get you to choose their product over their competitors’ and may have a bit of wiggle room in terms of interest rates and terms if you ask.