Last Updated on June 3, 2017 by Andrew Lee
Louisiana keeps its residents and vacationers busy, with its numerous outdoor activities and other enjoyable things to do. All these, paired with its scenic landscapes, swamps, beaches, and trails, and one can easily see why the state garners its fair share of potential home buyers. New Orleans, Shreveport, and Lafayette are just a few of the top-notch cities to live in here. Booming industries include tourism, seafood, and natural gas production just to name a few. (Source: Livability.com)
The state also has a relatively low cost of living – lower than those of many other places in the country. (Source: Sperling’s Best Places)
Considerations before Taking the Big Step to Home Ownership
Becoming a home owner is one of the biggest decisions anyone can ever make; thus, it’s crucial to take as much time planning and preparing for it. There are several factors that can help them make the right choice, including the following:
- Established finances. Home buying is already a good idea for consumers who have secured and guaranteed income and know they can make their potential monthly mortgage payments on time.
- Enough savings for a down payment. In most cases, lenders require their borrowers to make a down payment of at least 20% of the property’s overall selling price. In the case of a house priced at $200,000, the home buyer should have at least $40,000 to put down on it to avoid the additional expenses associated with purchasing mortgage insurance.
- Current and foreseeable housing needs. Knowing how long one will stay in the soon-to-be purchased home can help consumers choose the type of mortgage better suited for their housing requirements.
- Credit score rating. The interest rates of home buyers also depend on their FICO score. Those with good credit score rating often have better rates, while those with a poor score can expect higher interest rates.
Quick Historical Overview of Mortgages in the State
Over the years, The Pelican State has closely followed the tracks of the national mortgage rate average. For instance, in 2014, it was tied at 4.13% with the rest of the country. Come 2015, it was at 0.01% higher, at 3.89%. The good news is, current rates in the state average lower than many the rest of the United States combined. This is one reason many consumers now consider making the switch from being renters to home owners. (Source: SmartAsset)
Property Value Expectations
Aside from having an average mortgage rate lower than the country, price of real estate in LA is also slightly cheaper than in some other states. On average, a home here can fetch a price of $192,000. Property home value average in the entire nation is $193,500.
It is also worthy to note that single-family homes, which account for 95% of the housing market, has an average value of $101,686.37. Condominiums, on the other hand, fetch an average of $106,705.17. Townhomes, on average, are valued at $75,423.80, while PUD homes are the most expensive, at $134,113.75.
When Borrowers Should Consider Refinancing
Refinancing can prove helpful in certain occasions, although home owners should first make sure they really can benefit from it, or they risk adding to their already significant amount of debt. In a situation wherein a borrower can secure a new interest rate 1% lower than the old one may find refinancing a good idea. Another ideal situation is when a borrower can have considerable savings when switching from a fixed-rate mortgage to an ARM or vice-versa.
State of Louisiana Division of Administration – Office of Community Development (Louisiana Recovery Act): http://www.doa.la.gov/Pages/ocd/Index.aspx