Mortgage Rates North Dakota: A Complete Guide To The State’s Homebuyer Programs
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North Dakota used to have a stable housing market, but it’s starting to transition into a seller’s market. This means that homes in ND are in high demand, and you may experience competition in finding affordable homes. However, you can increase your chances of finding a good home deal by knowing the local mortgage rates.
You can learn all about mortgage rates in North Dakota with this guide! Read on to find insider access to the latest mortgage and refinance rates in the state, as well as a guide to the state’s homebuyer assistance programs.
Mortgage Options In North Dakota
There are three main home loan types that you can choose from. Since each loan type has its features and requirements, you should choose the one that best fits your financial needs and circumstances.
Conventional Home Loan
Conventional mortgages are any home loans not offered by government entities. These loans are usually offered by banks and private lenders and have loan amount limits determined by the Federal Housing Finance Agency (FHFA). FHFA loan amount limits for the entire State of North Dakota are set to the national average of $548,250.
There are three conventional mortgage types, which feature unique rate schemes and cater to different needs:
Fixed-rate mortgages have a static interest rate that remains the same for its entire term. This stability leads to consistent monthly payment amounts that won’t change due to market conditions. A fixed-rate mortgage’s consistent rates also make them popular among first-time homebuyers. However, this stability comes at a higher mortgage rate compared to other loans.
People most often take 30-year fixed-rate loans which offer low monthly payments. However, your lender may offer 15-year or 20-year loan terms which feature lower rates.
Adjustable-Rate Mortgage (ARM)
Adjustable-rate mortgages, like its name implies, have rates that readjust annually. These adjustments are based on a market index chosen by the lender and lead to monthly payment amounts that rise or fall throughout the loan’s life. However, most ARMs start with an introductory period with fixed interest rates.
The low rates on an ARM’s introductory period make them good for short-term savings. As a tradeoff, ARM rates tend to be predictable once it enters the adjustable phase. Your introductory period can last anywhere from 3 to 10 years. Its length is usually written on the loan’s title – for example, a 3/1 ARM has a three-year introductory period.
Your lender may offer a jumbo loan for higher-priced homes. Jumbos have higher loan amounts but come with higher interest rates and higher credit score requirements.
Government-Backed Loan Programs
The U.S. government helps boost homeownership rates among several target demographics like veterans and low-income homebuyers. Three loan types fall under this category:
FHA loan: Designed for borrowers without good credit, FHA loans typically have more lenient qualification requirements and lower lending limits. However, you need to pay for mortgage insurance (MI) for the entire life of the loan as well.
VA loan: You can qualify for these zero-down loans if you’re an active-duty military member or a veteran. You need to pay a VA funding fee worth 2.3% to take advantage of its zero-down feature, but you can lower this fee by putting more money down.
USDA loan: This loan program is designed for rural community development and has strict area requirements. Qualifying for a USDA loan grants you a zero-down loan with low MI premiums.
Mortgage refinancing entails getting a new loan to pay your existing mortgage balance. There are two types of refinancing that accomplish different goals:
Rate and term refinance: This type of refinancing alters your loan term and length. You can use it to modify your loan’s duration or change its type.
Cash-out refinance: Cash-out refinancing liquidates your home equity into cash by providing you a loan larger than your current mortgage balance. After your loan is paid off, any money left over can be used for other needs.
Compare Mortgage Rates In North Dakota
Historically, North Dakota mortgage rate trends are slightly lower compared to the national average mortgage rates. Check the table below for a look at the most current mortgage rates in North Dakota. All the rate information here is taken from America’s top mortgage lenders.
Today’s Mortgage Rates In North Dakota
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The listed mortgage and refinance rates may change without prior notice. Your actual rates may vary depending on your financial circumstances and other factors.
Input your financial details into the calculator above this page for a customized North Dakota mortgage rate estimate.
First-Time Homebuyer Programs In North Dakota
Through the North Dakota Housing Finance Agency (NDHFA), the state provides a broad range of homebuyer assistance programs. You can qualify for NDHFA loans and down payment assistance if you fulfill these requirements:
Meet home purchase price and income limits
Put down $500 of your own money for the purchase
Purchase a primary residence in North Dakota
NDHFA’s primary program offers affordable mortgage loans to first-time homebuyers that fulfill the aforementioned criteria. You can opt for conventional, FHA, VA, or USDA loans for your FirstHome loan.
The HomeAccess program features similar qualification requirements and benefits to a FirstHome loan. You don’t have to be a first-time homebuyer to qualify for NDHFA HomeAccess. As long as you fall under one of these categories, you can qualify for a HomeAccess loan if you fall under one of these categories:
Single parents with at least one dependent child
Person living with a permanent disability
Person over 65 years old
NDHFA Down Payment & Closing Cost Assistance Program
NDHFA borrowers can also qualify for two down payment assistance programs called the DCA Program & Start Program. Both programs offer down payment and closing cost assistance worth 3% of your purchase price as a second loan.
To qualify for either program, you must buy a single-family home or duplex with your NDHFA loan. DCA participants must complete a homebuyer education course and buy a home outside a 100-year flood plain.
Buying A Home In North Dakota
There’s not much room for error in the home buying process – even small mistakes can cost you thousands. To help you avoid any expensive missteps, you can follow our guide to home buying in six easy steps:
Step 1: Start The Mortgage Process
Your first priority should be to submit a mortgage application to a lender and get pre-approved. Getting pre-approved provides you with a pre-approval letter, a document containing your loan details like its maximum amount and interest rate. This letter acts as your budget guide and a sign of financial readiness to buy property.
Step 2: Interview Real Estate Agents
Experienced real estate agents help secure the best housing deals and provide key details about your neighborhood. To pick the best realtor, pay attention to their years of experience and review scores when you interview them.
Step 3: Search For Homes
Start your house hunt by choosing a neighborhood that fits your lifestyle and budget. Search home listings in the area and look for the most affordable homes available.
If there are no affordable homes that fit your needs, you can buy a fixer-upper instead. The money you saved from buying a cheaper home can be used to pay for home improvements.
Step 4: Put Down An Offer
You may encounter other buyers vying for the same house. Make an offer above the listed property value to catch the seller’s eye and boost your chances of landing the deal. Consult with your realtor about how much you should put down to avoid overpaying.
Step 5: Schedule Inspections And Appraisals
Hire home inspectors and appraisers to examine your new property. If they find that the home is overvalued or has property defects, you can renegotiate a new deal with the seller.
Step 6: Close The Deal
Prepare money to pay your closing costs, origination fees, and other expected costs before closing day. Have your realtor present during paperwork signing to help you answer any questions before finalizing the deal.
How To Get Better North Dakota Mortgage Rates
Mortgages are a long-term commitment. While reducing your rates by a few decimal points doesn’t look like a lot now, your savings will eventually add up. Those decimal points you take off can save you thousands of dollars in the long term. Follow these tips to reduce your North Dakota mortgage rates:
Make A Larger Down Payment
Putting more money down reduces your mortgage balance, so you owe less money. This reduces your risk to the lender and increases your home equity, making them more likely to give you better rates. If you pay more than 20% down, you can also avoid costly mortgage insurance premiums.
Work With A Mortgage Broker
Comparing loan offers from multiple lenders can help you find the best value, but it can be challenging if you don’t know what you’re looking for. Independent mortgage brokers can help you scour the market for good mortgage deals and advise you on which lender best fits your needs.
Buy Discount Points From Your Lender
Discount points reduce your rates for an upfront fee. These points are typically worth 1% of your mortgage and drive your rates down by 0.25%. However, discount points only affect your current loan, so you should only buy points if you’re not planning to refinance.
Additional Rate Reduction Steps
To further drive down your rates, you can take these steps in conjunction with the tips offered above:
Apply for shorter loan terms.
Increase your credit score.
Compare offers from multiple lenders.
As North Dakota shifts into a seller’s market, you’ll face more competition to get affordable homes. Knowledge of the local mortgage rates and understanding the home buying process can help you spot the best deals and act fast to buy good homes.
If you’re still looking for the best mortgage loans in the Peace Garden State, Wesley LLC is here to assist you. Contact our professional team today for more mortgage resources and advice!