Last Updated on June 9, 2017 by Taylor Welshe
There’s no question about the popularity of South Dakota, what with it being home to Mount Rushmore. However, this internationally-famed mountain isn’t the only attraction to the state. The beautiful scenic landscapes, high quality education, abundant natural resources, thriving tourism and agricultural industries, as well as low cost of living here garners the attention of many new home buyers. And while Sioux Falls, Brookings, and Yankton are the state’s primary locations, it boasts of many other charming cities. (Source: Livability.com)
Low cost of living allows for impressive home ownership rate
The major component that drives the lower cost of living in the Mount Rushmore State is housing. It has an impressive home ownership rate of 70.1%. (Source: U. S. Bureau of Census)
On average, a house here has a median value of $171,300. This means that buying a house here costs less than in many other places in the country. For comparison, the national median home value is $195,300. (Source: Zillow)
However, home buyers should still take as much time as possible when planning their purchase. A house is one of the most expensive financial responsibilities one can ever take on, so it’s a must to explore and assess all available options. Everyone who wants to buy a residential property should first determine how much they are willing to and can spend towards a house, including the down payment, closing costs, and monthly mortgage payments which include interest.
A brief overview on mortgages
Mortgages are the most common way to finance the purchase of a house, seeing as only a tiny percentage of the entire U. S. population can pay for the entire selling price of a property upfront.
Basically, home buyers who take out a mortgage borrow money – called capital – that they will use to buy and pay for a house. The lender will apply a monthly interest rate on the loan, the payment for which serves as the lender’s profits. So in addition to paying back the capital, the borrower also has to pay interest.
How much the mortgage rate is depends on many factors, one of which is whether the loan has a fixed rate or an adjustable-rate. This also depends on the term (length of time for paying back the loan) the home buyer will choose, although the most popular is a 30-year term.
Best candidates for a fixed-rate mortgages
Below are some of the situations that make fixed-rate mortgages more suitable for home buyers:
- They prefer the security of predictable monthly payments rather than hoping for the possibility of interest rates going down
- They intend to occupy the same house for a long period of time
- They want to have low monthly payments by spreading it over several years, like 15, 30, or 45 years
Who should go for an adjustable-rate mortgage
An ARM is best for those who want the following features:
- Initial interest rates lower than those for fixed-rate mortgages (first one to five years of the loan term)
- Have plans of staying in the same house only for a short period of time
- Can afford to take on the risk of interest rate either going up or down
Help with obtaining or paying off a mortgage
Home buyers having some trouble obtaining a mortgage or keeping up with their loan payments can seek the help of several organizations.
For instance, first-time mortgage applicants can apply for a fixed-rate mortgage with a low interest through the South Dakota Housing Development Agency. SDHA also offers mortgage tax credit programs, which reduce the federal income tax borrowers have to pay for; thus, freeing up income they can spend towards their home.
Help is also available from the United States Department of Agriculture Rural Development, which provides down payments assistance, while the Home Affordable Refinance Program aids those who might benefit and qualify for refinancing.
South Dakota Housing Development Agency
United States Department of Agriculture Rural Development
Home Affordable Refinance Program