How to Buy a House in North Dakota: A Homebuyer’s Guide
Updated: October 14, 2023
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In North Dakota, the average value of a home is approximately $284K, up about 8.7% from the previous year. A house in North Dakota is less expensive than the $357K U.S. average home value.
Furthermore, residents of North Dakota pay $1,052 per month on average for their mortgage. When buying a new house, price is an important consideration, but you also need to keep in mind other important factors, such as the mortgage terms.
MoneyGeek recommends familiarizing yourself with the homebuying process, so you know how to submit the loan application, complete the deal and avoid incurring significant debt. MoneyGeek’s comprehensive guide covers the most important details for those who want to buy a home in North Dakota.
Choose an Ideal Location
Location is one of the most important factors influencing the price of a home in North Dakota. According to Zillow data for 2022, the average home price in Turtle Lake costs $131K, considerably lower than the average home price in Wilton of $207K.
However, the best place to buy a house in North Dakota depends on various aspects, such as affordability, accessibility to amenities, local culture and cost of living.
Calculate Mortgage Rates
North Dakota homebuyers have access to various types of mortgages and rates. Your preferences and buyer profile will determine the best mortgage option for you.
Factors such as your annual income, credit history and debt-to-income ratio will determine the loan amount and interest rate you qualify for. Always compare lenders to find the best mortgage rates for your needs.
Prepare Down Payment Requirements
Different mortgage types require different down payments. Though most mortgages call for a down payment of at least 20% of the total loan amount, others, like FHA loans, only require 3.5%. You might even be eligible for a mortgage without a down payment, such as a VA or USDA loan.
Get Pre-Approved for a Mortgage
Before buying a house in North Dakota, you must obtain pre-approval for a mortgage. Some sellers require a loan pre-approval before they show you their property.
Pre-approval is a guarantee from the lender that details the exact loan amount you are qualified for. A pre-approval differs from a pre-qualification in that the latter indicates you qualify for a loan, but it does not constitute a commitment.
Conduct a Home Inspection
Buyers must complete a home before purchasing a home. A thorough inspection will uncover any serious problems in the house and potentially lethal safety hazards. Home inspections can give the buyer negotiating leverage if the home requires repairs or other upgrades. In addition, some lenders will only finance your home after you conduct a professional inspection.
Close Your Mortgage Loan
You should factor in closing costs when buying a house. Closing costs include amounts paid to the lender for the credit report, the appraisal, documentation and other expenses. In addition, you may be required to pay third parties for services such as pest inspections, legal support and home appraisals.
North Dakota Homebuying Details
In North Dakota, the average property price and the cost of living are lower than the national average. Homebuyers in the state can choose between conventional and government-backed mortgages. North Dakota also offers several down payment assistance programs to aid individuals who cannot afford closing costs or a down payment.
A plethora of down payment assistance programs are available to North Dakota residents to help them finance a home. Qualifying participants can get a loan or a second mortgage to fund the closing costs or a down payment. The North Dakota Housing Finance Agency (NDHFA) offers second mortgages to low-to-moderate-income borrowers for up to 3% of the original mortgage amount. Buyers can put these funds toward a down payment or closing costs.
The NDHFA program can only be utilized to purchase single-family houses or properties with a maximum of two units. Buyers are required to make an initial investment of at least $500 to participate in the program. There are restrictions on both the maximum purchase price and your annual household income, both of which vary from county to county.
Frequently Asked Questions About Buying a Home in North Dakota
To assist you in understanding how to buy a house in North Dakota, MoneyGeek answers questions about the process.
You should ask yourself several questions before purchasing your North Dakota home, including:
- Which is the best location based on your needs and budget?
- What type of mortgage and mortgage rates are you eligible for?
- How much down payment can you afford?
Homebuyers who appreciate living in an area with a low population density and abundant outdoor activities can benefit from buying a residence in North Dakota. In addition, North Dakota has a lower average home value than most states in the United States.
The average home value in North Dakota is roughly $284K, an 8.7% increase from the previous year. If you have the funds, purchasing a home in this state may be wise, as values should continue to rise.
Depending on the type of mortgage you qualify for, a specific amount of funds will be required to purchase a property in North Dakota. To avoid private mortgage insurance, mortgage companies often require a 20% down payment from borrowers.
The average real estate tax rate in North Dakota is 0.95%, and the average yearly property tax is $1,586.
The average home value in Turtle Lake is approximately $132K, and the cost of living is equally reasonable. It is one of the most affordable cities for homebuyers in North Dakota.
sources
- Zillow. "North Dakota Home Values." Accessed October 22, 2022.
- Zillow. "United States Home Values." Accessed October 22, 2022.
- Livingcost.org. "Cost Of Living In North Dakota." Accessed October 22, 2022.
- US Department of Agriculture. "Single Family Housing Direct Home Loans in North Dakota." Accessed October 22, 2022.
- Zillow. "Compare Today's Mortgage Rates in North Dakota." Accessed October 22, 2022.
- FHA. "FHA Down Payments For Homebuyers." Accessed October 22, 2022.
- Tax Foundation. "Taxes In North Dakota." Accessed October 22, 2022.
- International Association of Certified Home Inspectors. "Home Inspection Standards of Practice." Accessed October 22, 2022.