How to Buy a House in Missouri: A Homebuyer’s Guide
Updated: December 6, 2023
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The average house value in Missouri is $236K, which has increased by 13% in the past year. Rates in Missouri are relatively more affordable than the national average of $357K.
According to the Missouri Economic Research and Information Center, the state has the 7th most affordable cost of living in the U.S. If you’re buying your first home in Missouri, you will pay less than in most other housing markets in the country.
However, the cost of living is one of many factors you need to weigh when buying a home. You also need to consider the lender terms, repayment period, interest rate and other requisites. In this guide, MoneyGeek helps you understand the nitty-gritty about buying a house in Missouri.
Choose an Ideal Location
The best place to buy a house in Missouri will depend on your preferences. Prices vary between towns, cities and counties. You’ll also need to consider how the location will affect your monthly expenses. For instance, a rural property may cost less to purchase but might increase your transportation costs.
Finding the best place to buy a home must be cohesive with your lifestyle and needs. If you have an active lifestyle, it’s best to find a property near a gym or recreational areas. Research the neighborhood culture and accessible amenities.
Calculate Mortgage Rates
Your credit score, income, loan type and repayment terms will impact your mortgage rates. Finding a balance among these factors will help you identify the most suitable mortgage for you.
Prepare Down Payment Requirements
Mortgage down payments vary depending on your loan type. The typical down payment is 20% of the purchase price, although some can be as low as 3.5% or even zero.
Get Pre-Approved for a Mortgage
Once you select a mortgage lender, you can get pre-approved for a mortgage. Pre-approval is important, as most sellers require it before showing you their property.
However, pre-approval doesn’t mean pre-qualification. Pre-qualification is when the lender provides you with a loan amount estimate. Pre-approval means the lender is committing to letting you borrow a certain amount and includes a hard credit check.
Conduct a Home Inspection
Before buying a home, buyers should conduct a home inspection, and some lenders won’t finance a home without one. During a home inspection, third-party professionals survey the property and identify any issues. The homebuyer pays for the home inspection.
Close Your Mortgage Loan
After thoroughly reading the loan terms, it’s time to close the mortgage. When you buy a home, closing costs cover the expenses the lender incurs when generating your credit report, appraisal fees and documentation fees.
In addition, you’ll shoulder the cost of the home appraisal, legal work, pest inspection and more.
Missouri Homebuying Details
This MoneyGeek guide outlines key steps to follow during your homebuying journey. You should also contact your lender or real estate agent to identify whether Missouri requires any additional steps.
Those struggling to afford a down payment can take advantage of several homeowner assistance programs in Missouri.
First Place Loan Program: Qualified borrowers can receive up to 4% of the first mortgage amount in assistance funds that can be used for down payment or closing costs. The funds come in the form of a forgivable second mortgage and don’t need to be repaid as long as the borrower stays in the home for 10 years.
Next Step Program: The Missouri Housing Development Commission introduced this program to help borrowers settle their down payment. Borrowers can receive up to 4% of the first mortgage amount in assistance funds.
Frequently Asked Questions About Buying a Home in Missouri
MoneyGeek answers questions about buying a home in Missouri.
- Are you ready to buy your first home?
- Where do you want to live in Missouri?
- Are you financially prepared and capable of paying a mortgage?
Yes, as long as you’re emotionally and financially ready.
Yes. Renting might cost you more than buying a home in the years to come. But buying a house is wise if you’re financially ready and capable.
It depends on the mortgage type you can get. Usually, mortgage lenders will require a 20% down payment.
The average property tax rate in Missouri is 0.93%.
The most affordable city to buy a home in is Richmond.
sources
- Zillow. "Missouri Home Prices." Accessed October 21, 2022.
- Missouri Economic Research and Information Center. "Cost of Living Data Series | Missouri Economic Research and Information Center." Accessed October 21, 2022.
- FHA. "FHA Down Payment Assistance Grants for 2022 in Missouri." Accessed October 21, 2022.
- FHA. "First Time Homebuyer Program." Accessed October 21, 2022.
- FHA. "First Place Loan Program." Accessed October 21, 2022.
- FHA. "Next Step Program." Accessed October 21, 2022.