Last Updated on June 9, 2017 by Taylor Welshe
Although largely popular for its huge maple syrup production industry, there’s a lot more to love about Vermont. Its residents don’t get tired of its great outdoors, which offer a multitude of recreational and entertainment options. With its numerous snowboarding and skiing spots as well as hiking trails, it’s easy to see why the locals love it and why it draws quite the number of home buyers. Just to name a few of its top-ranking cities are Burlington, Bennington, and Rutland. (Source: Livability.com)
Facts on housing prices and real estate values
Home buyers in The Green Mountain State should note that housing is the primary factor that makes cost of living here a little higher than the national average. (Sperling’s Best Places)
In the state, the median listed home price is $239,900. It’s worthy to note that in the whole of the United States, the median home value is only $195,300. In short, real estate is pricier here than in many other parts of the country. (Source: Zillow)
This hasn’t stopped consumers in taking the step towards home ownership though. The state’s impressive home ownership rating of 71.8% – even higher than states with lower-than-national-average cost of living – backs this up. (Source: U. S. Bureau of Census)
How much a house costs depends on the particular type of building it classifies as. The four major classifications include the following, alongside their average values, from cheapest to most expensive:
- Condominiums: $141,069.26
- Single-family Homes: $153,597.33
- PUD Homes: $167,549.94
- Townhomes: $173,084.20
Mortgages: Loans that allow consumers to become home owners
Most people in the United States have to rely on some financing service to buy a house, and majority of them apply for a mortgage. These are loans specifically made for making real estate purchases. There are two primary types, namely the fixed-rate and the adjustable-rate mortgages. VT borrowers will also find lenders offering jumbo loans, although these are often used for more expensive properties.
A home buyer who takes out a mortgage basically borrows money from a lender to cover the property’s selling price. The money lent is called capital. Since lending institutions have to make profits, they then apply an interest rate on the capital. So on top of the capital repayment, borrowers also have to pay interest.
In many cases, a down payment for the home is also required, and is usually 20% of the selling price. Those who can’t meet this but still qualify for a housing loan typically have to purchase mortgage insurance, which protects lenders in the event that the borrower defaults on the loan.
Distinguishing fixed-rate from adjustable-rate mortgages
Both types of mortgages have beneficial aspects and drawbacks. This is why it’s of utmost importance that all home buyers take the time to assess which one best suits their needs and finances.
- Fixed-rate loans: The never-changing interest rate that comes with these mortgages is their primary attractive feature. Because of the unstable market, most people prefer the security of easily-predictable monthly mortgage payments. Most of those who choose this type of housing loan also intend to stay in the same residence for a long period of time.
- Adjustable-rate loans: Also known as variable-rate mortgages, they attract home buyers with their lower initial rates. This “teaser rate” won’t change for the first few years (length of promotion depends on the lender, but usually runs for one, three, or five years). The drawback here is that, once the agreed-upon teaser period is over, the rate can go up or down. In most cases, it does the former.
Resources and help for borrowers
Because Vermont real estate is costlier compared with other states, some borrowers may experience difficulties in buying a home or keeping their existing one. The good news is, several organizations can help. For instance, the Vermont Housing & Conservation Board offers assistance for home funding, wherein eligible home buyers can receive up to $44,000. The USDA Rural Development, on the other hand, offers payment assistance to boost the repayment ability of mortgage applicants.
Vermont Housing & Conservation Board
USDA Rural Development