Kansas, also endearingly called “America’s Breadbasket,” isn’t just known for producing some of the highest amounts of wheat in the country. Its beautiful sceneries and landscapes, comprised of prairies, forests, and mountains, also add to its appeal. These, plus the impressive quality of education and the many beautiful cities it boasts of, such as Wichita, Topeka, and Overland Park, also attract home buyers. (Source: Livability.com)

The lower-than-national-average cost of living here also makes it even more attractive as a place to live and even a family in. (Source: Sperling’s Best Places)

Home Values and Prices

The biggest factor that influences the low cost of living here is housing. With a median property value of $124,000, as opposed to the $195,300 of the entire country combined, it’s easier to become a home owner here than in many other parts of the United States.

The Most Common Mortgage Types in the State

In The Sunflower State, mortgages come primarily in two different types: the fixed-rate and the adjustable-rate mortgages (ARMs, variable-rate mortgages). A critical part of the selection process is understanding the primary differences between the two, and the situations where getting them makes for the smartest financial decision.  

Basics of Fixed-Rate Mortgages

Below are the key benefits of fixed-rate mortgages.

  • Locked-in interest rates; rates won’t change over the life of the loan term
  • Provides borrowers with security that their monthly payments won’t suddenly rise to an exorbitant price
  • 30-year fixed-rate loans have the cheapest monthly payments, since borrowers would pay for the loan plus the interest rate in a period of 30 years
  • Regardless of how the market performs, or how high interest rates go up, the rates of existing home owners remain the same

There are two main drawbacks to this type of housing loan. First is that, since rates are fixed, it won’t move even if the market performs really well resulting in a considerable drop in rates. The other is that 30-year loans, although they have the cheapest monthly payments, can easily make overall mortgage expenditures higher. This is because of all the payments made towards the interest alone.

Adjustable-Rate Mortgage 101

As for ARMs, the key attractions include the following:

  • Interest rates initially lower than the fixed-rate mortgages (teaser rate)
  • Teaser rate won’t change within the first one to five years (depending on the agreement with the lender)

The risk is great with an ARM though, since once the teaser rate period expires, the interest rate can already move upward, leading to significant rises in borrowers’ monthly payments.

Refinancing: When Home Owners Should Consider It

Home owners who qualify for refinancing may find it helpful in certain situations. If they can reduce their current mortgage interest rate by at least one percent, they should take a closer look at the deal, as it can save them a huge amount of money. Another situation this can come in handy is when it makes sense to switch from an adjustable-rate mortgage to a fixed-rate one, or vice versa.

Mortgage Aid for First-Time and Repeat Buyers

The Kansas Housing Resources Corporation offers forgivable loans to first-time buyers in order to minimize their overall home buying expenditures. Those who don’t meet the requirements of federal housing assistance programs can try the Moderate Income Housing program, which makes access to grants and loans easier.

The Kansas Housing Assistance Program also helps first-timers when it comes to making a down payment. Qualifying applicants can receive cash amounting up to 4% of what they need to put security down on the house they want to buy. They can also use the money to cover closing costs. This program also makes available unlimited funding as well as 30-year fixed-rate housing loans with less strict and rigorous requirements.

References:

Kansas Housing Resources Corporation: http://www.kshousingcorp.org/1new-page.aspx

Kansas Housing Assistance Program: http://kshap.org/