How to Buy a House in New Hampshire: A Homebuyer’s Guide

Navigating the real estate market can be very stressful. Consider contacting a real estate agent to expedite the process of becoming a homeowner if you are searching for the best and cheapest places to buy a house in New Hampshire.

If you do not know where to start, ask your friends and family for advice. It's also a good idea to request references from existing customers. MoneyGeek defines the ideal real estate agent as someone who is a licensed professional, understands the intricacies of the real estate market, communicates ideas effectively and has a trustworthy reputation.

Ultimately, the ideal real estate agent for you will be based on your preferences and needs.

The cost of living in New Hampshire can vary depending on where you’re located. MoneyGeek suggests estimating the costs associated with the following expenses:

• Auto insurance rates
• Health insurance costs
• Utilities (electricity, water)
• Food
• Taxes on income, property and real estate
• Gas or transportation passes

You can also use MoneyGeek's cost of living calculator to calculate your monthly expenses and identify the best place to buy a house in New Hampshire based on your needs and budget.

In comparison to other states, the cost of living in New Hampshire is comparatively low. Homes in suburban and rural areas will also cost less than those in urban settings. Although you can buy a house for less money, you may have limited access to basic facilities such as hospitals, schools, supermarkets or shopping malls.

While numerous New Hampshire cities provide affordable, high-quality housing options, Newport, Rochester and Berlin are among the most affordable cities in New Hampshire. In addition to housing costs, you should consider the cheapest places to buy a house in New Hampshire to guarantee that you can afford to live in the area of your choosing.

You can purchase a home in New Hampshire using one of the sewerage types of mortgages offered. Interest rates, terms, conditions and loan limits vary by loan type, so it’s important to understand each type to find the best one for your needs.

Assessing your credit score, employment history, DTI ratio, gross monthly income and other aspects will help you narrow down mortgage types and lenders.

The following are the average interest rates for each type of loan:

• Conventional home loans: 5.5 % to 6.5%
• VA loans: 5.7% to 6.0%
• USDA loans: 1.0% to 3.3%
• FHA loans: 6.3% to 6.4%

It is recommended to confirm your eligibility with a lender before submitting an application because some loans are only available to certain applicants. For instance, VA loans are only available to eligible military members.

MoneyGeek’s mortgage calculator can help you get a better idea of your mortgage amount and monthly payments. This will help you evaluate the home value that you can afford in New Hampshire. MoneyGeek's FHA vs. conventional loan calculator can also help you determine which type of loan is ideal for you.

After choosing your loan and calculating your approximate mortgage rates, you should choose a mortgage lender. If you are a first-time homebuyer or need housing assistance, you may be eligible for homebuying assistance programs to reduce your down payment or save on closing costs.

Understanding your financial situation can save you time and money. Keep in mind that each lender's requirements, loan limits and restrictions are unique. When processing your mortgage application, mortgage lenders often consider the following factors:

• Credit score: Although some lenders don’t have a minimum credit score requirement, they generally prefer borrowers with at least a fair credit score.
• Net income: Lenders use your income to assess your ability to repay your mortgage. Generally, having a higher income will make you eligible for a higher loan amount.
• Down payment: The amount you can pay upfront can indicate to lenders that you’re able to repay a loan. Typically a higher down payment will lead to lower APRs and better repayment terms.
• DTI ratio limits: Your DTI ratio indicates the proportion of your income that is used to repay existing debt.

If you do not meet a lender’s requirements, you may want to improve your application before applying. That way, there’s a higher likelihood that you’ll be approved.

Depending on the type of mortgage you choose, your down payment requirement will vary. For insurance, conventional loans typically require a minimum down payment of 20%, while USDA and VA loans have no down payment requirement. If you don’t qualify for a USDA or VA loan, you may be eligible for a low-down-payment loan, like an FHA loan, which requires a minimum down payment starting at 3.5%.

After determining the loans you qualify for, you can determine your down payment rate. Remember that your down payment will impact your monthly payment amount; larger down payments generally result in reduced monthly payments.

New Hampshire homebuyers should also be mindful of mortgage insurance, a measure that protects lenders in case a borrower defaults on their loan. Loan programs, such as FHA and USDA loans, require borrowers to obtain mortgage insurance. Other programs, like VA loans, do not require insurance. In addition, insurance is required for applicants that make a down payment of less than 20%.

For conventional loans, you may be obligated to pay monthly private mortgage insurance (PMI). However, after a few years of on-time payments, homeowners may be able to cancel their PMI.

A down payment of 20% of the purchase price may be unaffordable for some prospective homeowners. Luckily, New Hampshire offers a number of programs that provide financial assistance with the down payment.

• New Hampshire Housing Home Flex Plus: This program provides homebuyers with financial help equal to 4% of the loan amount. The assistance is provided in the form of a second mortgage that is completely forgiven after four years.
• New Hampshire Housing Home Preferred Plus: This program offers financial support in the form of cash equal to up to 4% of the buyer's base loan amount. The assistance can be used to pay for closing costs or a down payment.

If these options don’t meet your needs, there may be other homeowners assistance programs available to you.

Before you apply for a mortgage in New Hampshire, you should ensure that you have the following documents:

• Tax filings
• Proof of income and employment
• Records of assets
• Social Security number
• Records of other expenditures and financial events
• Photo ID
• Statements of bank accounts

While this list provides a general overview of what is needed, you should reach out to your lender to find out any specific requirements.

It’s important that you only apply for pre-approval when you’re ready to buy a home because pre-approval letters expire after 30 to 60 days. By gathering the necessary documentation for your mortgage, you can expedite the process.

While your pre-approval letter is valid, MoneyGeek recommends working on your financial profile to correct any issues that could impact your application being approved. For instance, during this time, you could work to improve your credit score and possibly receive a lower interest rate on your loan.

A pre-approval letter indicates that a lender believes you’re capable of repaying a loan and shows sellers that you’re a serious buyer. While there is no limit on the number of pre-approval letters you may request, we recommend applying for as few as possible since every application involves a hard credit check that negatively impacts your score.

A pre-approval letter typically contains the information below:

• Loan type
• Loan amount ceiling
• Loan term
• Interest rate
• Mortgage repayment each month

The specifics of a pre-approval letter may vary depending on the lender. While some lenders may simply use the information included in your application, others may request further documentation. Again, while your pre-approval letter is valid, you should work on improving your borrower profile and negotiate for the best mortgage terms.

By employing the help of a licensed home inspector, you can save money on your home purchase. MoneyGeek suggests asking your real estate agent, friends or relatives for recommendations or researching qualified home inspectors in your area.

Standard house inspections typically include the following:

• Exterior
• Interior
• Roof
• Electrical
• Fireplace
• Plumbing
• Doors and windows
• Attic, insulation and ventilation
• Basement and foundation

In addition, there are special home inspections that examine the foundation, mold formation, wood-destroying organisms (WDO), pests, sewer and other hazardous items.

Although it’s not a state-wide requirement in New Hampshire to complete an inspection prior to the purchase of a home, some cities and counties may require it. Besides the standard home inspection, additional inspections may also be needed for your prospective home. Therefore, it’s important to find out in advance what’s included in your standard home inspection, so you can budget accordingly for more specialized ones.

A home appraisal is a crucial step when purchasing a house in New Hampshire. A licensed appraiser will assign a financial amount based on the property's current market value and inspection results. This can provide the mortgage firm with more information regarding the amount of funds they are willing to lend a borrower.

During the home evaluation process, an appraiser will inspect the interior and exterior of your prospective residence and collect data on the property's surroundings. Following the inspection, the appraiser will next provide the homebuyer with a written report.

Preparing the necessary documentation for closing can be a time-consuming process. When you’re ready to close your mortgage, you’ll be required to sign the following documents:

• Final loan application: You’ll be required to sign your initial loan application to verify that the information is correct. During this time, you should notify your lender if any financial information, like your income, has changed.
• Homeowners insurance policy: You will be financially protected from losses to your home's structure and contents thanks to homeowner's insurance.
• Mortgage note: This includes the mortgage amount, interest, payment dates and terms. It’s important you read this carefully because it legally binds you to pay the mortgage.
• Property deed: This includes details about the property and transfers ownership from the seller to the buyer.
• Closing disclosure: This includes the terms of your loan. By law, lenders are required to provide the document at least three business days before you close your mortgage.

Ensure you understand the terms and conditions of all documents prior to signing them. This could help you save on unexpected costs in the long run. If you encounter any unfamiliar terms, you should consult an expert or your lender.

The following list of closing costs, though not comprehensive, provides a general idea of what you should expect to pay when closing your mortgage:

• Appraisal fee: The amount you pay an appraiser to determine the home's market value.
• Credit report: The credit reporting agency compiles a borrower's financial history and provides it to a lender, disclosing the associated risk.
• Escrow: The lender sets up an account in which to hold the borrower's property taxes, private mortgage insurance, and, if necessary, house insurance.
• Home and pest inspections: There may be times when you need to hire a specialized professional home inspector to evaluate the condition of a property.
• Homeowners insurance: Owners are protected from legal responsibility for specified mishaps on the property as well as damages to their homes and possessions.
• Prepaid interest: The interest that is paid on a mortgage loan by the borrower before the actual term of the loan begins.
• Recording fee: Some government agencies charge a fee for recording documents that reveal a borrower's ownership interest in a property and any possible liens against it.
• Title insurance: This fee safeguards the lender in case a property is lost due to a title defect.

In certain cases, the seller may contribute to a portion of your closing fees. This seller contribution is generally negotiable when making a bid. Nevertheless, you should be aware that your lender may limit the amount a seller can contribute to closing fees.

The home buying process is long but straightforward. After you’ve selected the best place to buy a house in New Hampshire, compared mortgage rates and reviewed the required paperwork, you can close on your home. Keep in mind, though, that a home inspection and pre-approval are key to the success of this process.

Once you’ve completed these steps and you’re a homeowner, it’s important to keep in mind that your journey isn’t complete. The next stage is to effectively manage your finances and monthly mortgage payments.

As a homeowner, you are responsible for establishing an emergency fund and a budget for home maintenance costs, among other obligations. A higher down payment is one approach to ensure a low monthly payment and interest rate.