There’s no way to escape the stress of buying a new home, but Oklahoma authorities say careful planning before buying can help avoid missteps. While Oklahoma continues to see an increase in the number of homes up for sale and ongoing price slippage, a recent uptick in state foreclosures suggests some Oklahoma homes up for sale may be distressed and in need of more than the usual number of repairs. This guide is designed to provide some relief in your search for a new home, offering important advice on how to qualify for the best possible mortgage and find housing counselors and financial assistance.

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Mortgage Rates in Oklahoma

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Oklahoma mortgage rates are still low and expected to remain stable, with little room to move lower due to ongoing signs of a weak local economy and a small chance of rising unless changes occur at the federal level.

Economically depressed by the collapse of the oil and gas industry and a restrained mining sector, the state’s unemployment rate rose to 5 percent in July, topping the national rate for the first time in 26 years. The national unemployment rate was 4.9 percent in July.

Foreclosures in Oklahoma continue to rise, last at 0.6 percent, matching the national rate. Those foreclosures add to the inventory of available single and multi-unit homes but may be keeping a floor under mortgage rates as lenders view the uptick in foreclosures as a sign of lingering risk.

The average price of a non-distressed home varies by city, but home prices in most major markets slipped, year over year. In Tulsa, for example, the average home sale price topped $182,700 in June 2016, down from $195,500 a year earlier. Homes are in demand in Tulsa, Lawton and Oklahoma City.

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First-Timer? There’s Help for You in Oklahoma

Oklahoma offers the usual suite of financial assistance products to first-time homebuyers and homeowners who want to refinance or move to a larger home. The Oklahoma Housing Finance Agency (OHFA) has numerous programs with fixed 30-year mortgages and grant assistance for closing costs and down payments. It also provides loans reserved specifically for police officers, firefighters and educators.

Down payment grants usually range from 3.5 percent to 5 percent of the loan amount with a maximum purchase price of either $270,975 or $214,925, depending on the type loan. Maximum income levels to qualify varies by county and family size, and minimum credit score is usually 640.

The OHFA Mortgage Credit Certificate (OHFA MCC) allows borrowers to reduce the amount of federal taxes they owe by claiming 40 percent of their mortgage interest up to $2000 per year as a tax credit on tax returns for the life of the loan.

Several Oklahoma cities also offer homebuyer assistance, typically through Community Development Block Grants or Home Investment Partnership fund. Midwest City, for example, offers up to $5,000 for closing costs or a down payment towards a first home. Check out our first-time homebuyer’s guide for more details on the homebuying process.

Financial Assistance for First-Timers Hoping to Buy in Oklahoma

Oklahoma offers federal, state and city administrated financial assistance to help first-time homebuyers cover costs for down payments, closings and other expenses.

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To Get Financial Help in Oklahoma You Must See a Housing Counselor

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Understanding Home Affordability in Oklahoma

Oklahoma realtors often ask new clients what they want and need in a new home before calculating what is affordable. How much you can afford is driven by current interest rates, your level of existing debt and how much money you have for a down payment. Potential buyers also should assess whether the house is structurally sound or needs significant work, which can add to costs. Ask yourself whether you have enough extra monthly income to handle unforeseen expenses and remember, the cost of buying a home does not include upkeep, maintenance, insurance or property taxes. Many realtors urge buyers to get pre-approved or pre-qualified for a loan because sellers are more likely to negotiate with buyers backed by a bank.


Oklahoma Mortgage Rates and Prices Affect Monthly Payments

Metro Area Estimated Monthly Mortgage Payment* Q1 2016 (Change from Previous Year) 2015 Median Home Price 2014 2013
Oklahoma City $661 $141,000 (+3.20%) $149,600 $150,300 $153,100
Tulsa $660 $140,800 (-3.00%) $150,200 $145,500 $143,100

Source: National Association of Realtors Q1 2016 Metropolitan Median Area Prices and Affordability report.
*Estimated Monthly Mortgage Payment is based on median home prices for the metro area in Q1 2016 and a 30-year fixed mortgage with today’s rates.

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FHA and Other Borrowing Limits Apply in Oklahoma

Oklahoma Housing offers all loan products insured by the Federal Housing Administration (FHA), Veterans Administration (VA) and Rural Development Agency. The federal government and fluctuations on Wall Street typically determine loan limits for conventional and FHA loans. In Oklahoma, government loans have a purchase price limit of $271,050 and income eligibility limits of $75,720 for one to two-person households and $88,340 for a household of three or more. Limits do not vary by county. For conventional loans, the purchase price limit is $417,000, with income limits of $113,580 for a one to two-person household to $123,045 for a household with three or more. A credit score of 640 to 680 is required depending on the loan product and the debt to income ration can be no more than 45 percent.

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Buying a Home in Oklahoma: Experts Weigh In

Joe Pryor

Joe Pryor is an investment specialist at The Virtual Real Estate Team and 26-year industry veteran based in Oklahoma City. Also, past president of the Oklahoma Real Estate Association.

Tricia Auberle

Tricia Auberle is director of the Oklahoma Homebuyer Education Association.

What was the market like before the crash and now?

Pryor

In linear markets like Oklahoma City, there are no booms or busts. We do not see a lot of depreciation year over year. In 2007 and 2008, when the meltdown happened, there were not the same big problems in Oklahoma City or other major cities in the state, nor did we see a lot of foreclosures compared to other states. Oklahoma City and similar urban locations were not bubble markets. Unemployment went up and we had about a 5 percent drop in the value of homes, but that’s what you would expect in a recession. The market slowed because people were not getting the loans they needed, but Oklahoma was okay in general because the value of land did not drop and developers did not go out of business. Although we had some homes lost to foreclosure, as the market improved, we had an inventory situation because corporate entities and Wall Street bought up all the foreclosures.

Auberle

The effect of the crash wasn’t as great here as in other markets so we did not see as many foreclosures. But it did affect first time homebuyers in that most of the federal funding programs for first time buyers dried up. Many of the assistance programs were federally subsidized so during the crash funds were diverted from home buying to rental property and that reduced the availability of financial help for the moderate income home buyer category. Mortgage rates have stayed low but we have seen a steady increase in home prices all along. Our average sale price for something of interest to a first time home buyer was $180,000 in June and that is way up from where it had been last year when prices were about $135,000 to $140,000. But we didn’t have some of the problems seen in other states’ because our two strongest [employment] market sectors are oil and gas and aviation and they both were doing well at the time of the crash. We did see some layoffs but not as much as in other states because our economy is more diverse than most.

What is the status of housing inventory?

Pryor

We are blessed with a level of affordability, but there is a lack of inventory. Over the past two years, we have seen multiple bidders for homes on the market and overall, there are more buyers than sellers. One problem is, there are not enough new houses. Many have refinanced so that has kept the inventory of homes for sale down. At the end of last year in Q4 of 2015, we saw an increase in housing inventory.

Auberle

If you look at where things were a year ago, our inventory is down by about 9 percent. It’s a seller’s market for those in the first time homebuyer category. It the homes for sale are nice and do not need a lot of work, they are gone quickly. The average number of days on the market for homes that are more affordable is about 60 days. That means what’s left are the fixer uppers. We do have a lot of construction going on here and there are a couple of builders doing large developments of homes for first-time homebuyers. At one time everyone was building high-end homes but I think they finally realized that part of the market is tapped out.

What are the biggest barriers for first time homebuyers?

Pryor

We continue to see that first-time homebuyers do not have the money for a down payment so they typically turn to FHA, which has programs that pay 3.5 percent of the down payment. I know many younger buyers have credit and student debt but at this point, it is cheaper to buy than rent. If you have little or no money for the cost of closing, it is not uncommon in Oklahoma to ask the sellers to pay, but that tends to add to the overall seller price, paid by the buyer over the life of the mortgage.

Auberle

Buyers are still struggling with down payment issues. In urban areas we see fewer people applying for loans because they know they won’t qualify. Applications are higher in the rural areas where the assistance programs [USDA, etc.] are seeing greater demand. Traditionally the banks looked at credit scores but right now and since last year, the biggest barrier for the younger generation when it comes to home buying is the debt-to-income ratio. It’s easy to say student loans are the problem but many of them took out loans that were larger than they needed and they used it to subsidize their standard of living. I don’t want to be too hard on them but many lived very well and they simply spent more money than they had to.

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Oklahoma Closing Costs

For a loan of $200,000, Oklahoma closing costs include an average origination fee charged by lenders of $1,027 and an average third party fee of $734, totaling a minimum closing of $1,761, according to Bankrate.com. Additional fees in Oklahoma include a review fee of $225, a loan funding fee of $400, tax services of $85 and a lender fee, which is limited by the state to no more than $800 for underwriting, processing and document preparation. Attorneys are not required by the state for closing cost oversight, but seeking legal representation is advised and typically can add roughly $350 to buyer costs for a review of title insurance and mortgage terms. Filing fees for court submissions do not vary by county.

Average Closing Costs in Oklahoma

Average Origination
Fees
$1,027
Average Third-Party
Fees
$734
Average Total Closing
Costs
$1,761

Source: Bankrate’s 2015 survey of closing costs.

Things to Consider When Refinancing Your Oklahoma Home

Oklahoma realtors say refinancing and reverse mortgages may be viable options for homeowners seeking to lower monthly mortgage costs. Refinancing may be beneficial if your mortgage was purchased when interest rates were higher, and you intend to remain in your home. Refinancing isn’t for everyone, but realtors say it’s worth considering for homeowners with good credit, limited student debt and who would achieve significantly lower month payments by refinancing a mortgage.

Oklahoma Resources for First-Time Homebuyers

Oklahoma Housing Finance Agency

Information on how to apply for low-interest mortgages and get financing for closing costs and down payments.

Oklahoma Homebuyer Education Association

A statewide partnership of nonprofits and business groups offering counseling and education on the home buying process and where to find financing.

Oklahoma Real Estate Commission

A state agency helping consumers find and verify licensed individuals qualified as professional home/mortgage brokers and realtors.

Oklahoma Association of Realtors

Connects real estate professionals in the state by providing comprehensive professional resources. Also maintains a searchable database of real estate professionals in the state.

Oklahoma Association of Community Action Agencies

Agencies operating together throughout Oklahoma to provide housing assistance programs, including access to homebuyer education and counseling.

Oklahoma Office of the U.S. Department of Housing and Urban Development

A state resource for consumers seeking information on HUD housing programs administered by the state. Also includes a searchable database to HUD homes for sale.

Housing Authority of the City of Tulsa

A homebuyer resource for education, financial planning and programs that offer financial assistance of up to $5000 for a down payment or closing costs

Oklahoma City Housing Authority

Offers education and counseling programs for low-income homebuyers

Tulsa Habitat for Humanity

One of numerous Oklahoma offices helping homebuyers buy and renovate or restore homes in distress.

Oklahoma state office of the USDA Rural Development loan program

Information on how to qualify, apply for and receive home loan assistance

REI Oklahoma

A statewide economic development firm providing financial assistance to cover closing costs and down payments for qualified homebuyers