When it comes to mortgages and home loans, Arkansas is a state that offers a unique situation. While home prices in the state are some of the lowest in the country overall, the interest rates on mortgages are often some of the highest in the nation. That means that even with median home prices below $100,000 in the state, monthly payments can be high if the wrong type of mortgage is taken out for a new home. So how do you make sure that you get the best mortgage for your new home in Arkansas? Your best bet is to educate yourself on the types of mortgages and home loans available, special programs offered in the state of Arkansas, and find a broker who can help you sort out the rest.
Know the Common Loan Types
As with most states, there are some common loan types available to those seeking Arkansas mortgages and home loans. Each offers distinct advantages and disadvantages based on your situation and your intentions.
Most everywhere, the most common type of mortgage or home loan is the fixed rate loan. The advantage to such a loan is that it is predictable and low-maintenance. Each month, the amount you pay toward principal and interest total is the same. The only factor that changes is how much of the total payment does so. The disadvantage, though, is that in a market like Arkansas' where the rates are currently fairly high, you will have to go through a total refinance when and if rates go down in the future.
In high interest areas, there is a type of fixed rate loan that can keep your payments down: the balloon payment loan. In such a loan, the payments are the same month to month, but the entire balance is not covered. At the end, there is a "balloon payment" that must either be paid or refinanced.
On the other hand, there is the adjustable rate mortgage (ARM). The ARM is useful in that the rate can be adjusted based on the current interest rate in the market. If rates fall, then, you can see your payments go down quickly. You can also combine an ARM with a fixed rate loan whereby your loan would be adjustable for the first few years with an option to lock in the rate later if it looks like they may go up.
Any of these types of loans can work well in Arkansas. Knowing the types of loans available to you, though, is really only part of the battle.
Arkansas Mortgage and Home Loan Programs
As with any other state, Arkansas offers mortgage and home loan programs. These can be based on factors from your career to your income. While you may not be eligible for many of the programs, they warrant exploration by anyone seeking an Arkansas mortgage or home loan.
For instance, if you are considering a home that is not located in a major metropolitan area, then you may want to look into one of the rural development programs offered in Arkansas. Since the state is largely rural, these programs help people buy homes in the country as a way to develop more of the state which can help its otherwise problematic economy.
If you are a veteran of the armed forces, you should look into a VA loan program in Arkansas. These programs often offer favorable interest rates as well as great breaks on lender fees and other home buying costs. Also, talk to your lender about other programs like the Community Home Buyer Program and some of the Fannie Mae programs that offer below market rates as well as help for down payments or no down payment options.
If you are looking into an Arkansas mortgage or home loan, you also want to make sure that you are working with a knowledgeable and qualified mortgage broker. By filling out the form below, you can get into contact with a broker who can help you make the best decision and get into the right program so that your mortgage experience is a good one.
