How Much Will Your Mortgage Be in Arkansas?
Arkansas, “the Natural State,” is in the south-central region of the U.S. and is home to roughly three million people. The state has a diverse geography, from densely forested land, to the mountainous regions of the Ozark and Ouachita Mountains, and to the eastern lowlands of the Mississippi River and the Arkansas Delta. The housing market is one of the most affordable in the U.S. with residents spending about 17% of their income of their homes, significantly less than the national average spend.
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Factors That Can Affect Your Arkansas Mortgage Calculations
Home Prices in Arkansas
With approximately three million residents, Arkansas is the 33rd most populous state in the U.S. Homes in Arkansas have a median list price of $176,000 with median home sales at $156,800 based on information collated in March 2020. Home values in the state have risen 3.8% over the past year.
The capital and most populous city in Arkansas is Little Rock, situated in the center of the state. Homes in Little Rock have a median list price of $219, 900 and average sale of $188, 100. Homes in Fayetteville in the north-west region of the state by the Ozark National Forest are more expensive. The average list price here is $295,000 with an average sale price of $222,700.
Fort Smith is the second most populous city in Arkansas, located south of Fayetteville on the other side of the Ozark National Forest. Home values are less in Fort Smith. Home prices have a median listing of $159,700 and sale of $139,100.
South of Fort Smith toward the Ouachita National Forest is the town of Hot Springs. Home prices here have a median listing of $249,000 and median sale price of $186,000.
Property Taxes in Arkansas
Arkansas’s property taxes are the tenth-lowest in the state. The statewide effective tax rate is 0.63% and the average homeowner pays under $800 annually. Arkansas has a flat rate between counties.
Arkansas Job Stats to Consider
Arkansas’s economy has evolved and diversified over the years and is now home to six Fortune 500 companies including the number one retailer in the country, Walmart. The state has a strong agricultural industry outsourcing poultry, eggs, milk, soybeans, cattle, rice, and more. Arkansas is also home to mines for natural gas, oil, crushed stone, bromine, and vanadium. According to CNBC, Arkansas has the fifth lowest cost of living and is the 20th best state for business.
Based on information collected form the Census ACS 1-year survey in 2018, the median household income recorded in Arkansas was $47,062, far below the national average of $61,937. This rose 5.73% in three years and the state is still regarded as the most affordable for living. The unemployment rate in October 2019 was recorded at 3.5%, on par with the national average of 3.6%, according to information gathered by the Department of Numbers.
Income tax in Arkansas has seven tax brackets with the lowest three brackets decreasing each year and changes to the middle-income brackets expected in 2021. As of January 2021, the top marginal tax rate will also decrease from 6.6% to 5.9%. The state sales tax rate is 6.5% with counties charging an additional amount to the maximum of 11.652%.
Job Stats (Civilian Labor Force, Employment, Unemployment)
Other Arkansas Costs That Can Affect Arkansas Mortgage Calculations
Homeowners Insurance in Arkansas
The average homeowner in Arkansas pays $1,373 annually for homeowner’s insurance. This is above the national average of $1,211 due to natural disasters such as hurricanes, tornadoes, flooding, and occasional earthquakes. Most premiums will cover theft, lightning, hail, wind, smoke damage, and more.
Flood damage is common in Arkansas but is not covered by most homeowner’s insurance premiums. Homeowners should consider purchasing an extra policy through the National Flood Insurance Program (NFIP). This will also cover hurricane and tornado damage caused by wind. Earthquake coverage can also be purchased at an additional cost.
Home Insurance in Arkansas
When shopping around for home insurance in Arkansas, watch out for how much coverage you need based on the structure of your home, your personal belongings coverage, liability protection, and coverage for your living expenses.
The actual amount you will pay in insurance will vary depending on your provider and where you live.
Homebuyers in Arkansas can expect to pay 2% to 5% of the final purchase price in closing costs. The average closing costs for a home purchased in the state work out to be $1,905. Approximately $915 will be for origination fees with the balance going to third-party fees.
Title insurance protects the owner and the mortgage lender against any unforeseeable future claims that might be incurred with the property’s title. These claims could be found in the public records but may have been overlooked at the time of purchase, even with a complete examination. Your lender will usually require a policy that equals the amount of the loan. Most title insurance policies are calculated at a rate of 0.5% to 1%.
Real Estate Transfer Tax
Real estate transfer tax is calculated at a rate of $3.30 per $1,000 of the house’s final sale amount. This is sometimes referred to as a deed tax, stamp tax, or mortgage registry tax. Homebuyers can expect to pay approximately $495 in real estate transfer tax for a home sold at $150,000.
A home inspection is an integral part of the buying process in Arkansas. An inspector will assess the property for any possible issues regarding its structure. This will include the foundation, roofs, basements, plumbing, heating and cooling systems, and electrical aspects of the home. If the house has a sewer system, this can be checked out separately. Costs of the inspection will depend on the area and the square footage of the home, but buyers can expect to pay approximately $400 for a 2,000 square foot house.