Arkansas Mortgage Rates

Living in Arkansas

From the Ozarks in the northwest to the hot springs in the southwest, Arkansas overflows with attractions, culture, entertainment and sports events that draw visitors to “The Natural State.” More than 3 million people also call this state home.

As of 2017, the median home price for Arkansas was $118,500, per the Census Bureau, but prices appear to be on the rise. According to the Arkansas REALTORS Association, the statewide highest average price in February 2019 was $180,100. This can be quite different from the median (Zillow lists the statewide median as $126,600), but the numbers do suggest an upward trend. Of course, actual average residential sales prices vary based on location, so some areas will be higher priced than others. For instance, in northwest Arkansas, the average residential sales price for May 2019 was $258,230, according to the Northwest Arkansas Board of Realtors. This reflects a steady climb since January 2019, which bodes well for homesellers.

However, it may be more of a buyer’s market given that Arkansas homes stay on the market for an average of 80 days, which, according to Zillow, includes the typical 30-day period spanning the time between an accepted offer and signing the closing documents. This, too, varies based on location. For example, in northwest Arkansas, homes stayed on the market for an average of approximately 96 days in May. Even so, Arkansas saw a year-over-year increase of 4.46% for most units sold in February. If that pattern continues through the year and beyond, Arkansas’ real estate market should hold strong.

The rules and costs of buying a home in Arkansas

When it comes to purchasing a home in Arkansas, it’s important to adhere to all state and federal laws to ensure the purchase is valid and legal.

Home seller and buyer laws

Real estate property disclosure forms: In Arkansas, there is no state law requiring the seller to disclose to potential buyers any information on the home regarding its history or possible defects. That being said, the Arkansas Real Estate Commission does require all licensed real estate agents to make every effort to find out the material condition of a home that could impact its value or desirability. In fact, licensed real estate agents utilize a “seller property disclosure” form developed by the Arkansas REALTORS Association.

Judicial or non-judicial foreclosure state: Lenders in Arkansas may utilize either a judicial or non-judicial foreclosure process. If the mortgage contract includes a “power of sale” clause, meaning the lender can retain the property and sell it to pay the mortgage balance, then the lender will proceed with a non-judicial foreclosure. If there is no “power of sale” clause, the lender will proceed with a judicial foreclosure, wherein the court states how much the borrower owes and gives a deadline for paying that amount. If the borrower does not pay, the clerk puts the property up for sale.

Because Arkansas is an “equitable distribution” state, the court will divide all marital assets, including real estate, 50/50 unless that division is not considered equitable. To make that determination, the court will take certain factors into consideration, including the length of the marriage; the age, health and station of both parties; the parties’ occupations; the amount and sources of all income for both parties; and the vocational skills and employability of each party.

As an escrow state, Arkansas does not require a real estate attorney to be present at a real estate closing. Instead, a closing agent or title officer will help homebuyers complete all closing paperwork.

Taxes

Summary of real estate transfer taxes: In Arkansas, the real property transfer tax is $3.30 per $1,000 of the actual sales price.

Property tax exemptions: The state of Arkansas provides special property tax exemptions for disabled veterans. These also apply to widows and dependent minor children of military members killed in action or those who died as a result of service, provided they meet all eligibility requirements.

Typical property taxes: In Arkansas, the median property tax is $532 per year on a home valued at $102,900, according to Tax-Rates.org. This equates to an average of 0.52% of a property’s assessed fair market value. Of course, the exact amount of property tax is dependent upon location. For instance, Benton County collects the highest amount of property tax, with an average of $929 per year. In contrast, Calhoun County collects the lowest amount, with an average of $275 annually.

Conforming loan limits

In Arkansas, the maximum loan limit for conforming loans is $484,350 for a one-unit dwelling. Conforming loans are those that meet specific requirements that allow them to be acquired by government-sponsored enterprises Fannie Mae and Freddie Mac. Those requirements relate to the maximum loan amount, borrower qualification requirements and type of property. Every year, the Federal Housing Finance Agency (FHFA) sets the conforming loan limits.

Programs for homebuyers in Arkansas

To assist borrowers in purchasing a home, the state of Arkansas offers homebuying programs for qualified borrowers through the Arkansas Development Finance Authority.

ADFA Move-Up

This program offers a 30-year, fixed-rate first mortgage – FHA, VA, conventional and USDA – without a prepayment penalty.

To qualify, the maximum purchase price is $424,100.

Learn more.

ADFA Mortgage Credit Certificate Program

This program provides a dollar-for-dollar tax credit for first time, low-to-moderate-income homebuyers. The certificate allows borrowers to claim a tax credit of up to 50% of the mortgage interest paid each year, with a maximum of $2,000. As long as the home is the primary residence, the borrower can claim this tax credit for the life of the loan.

To qualify, borrowers must be first-time homebuyers, meet specific income requirements and live in the home as their primary residence. Veterans and their spouses as well as homebuyers purchasing in an area of chronic economic distress also may qualify without the income and first-time buyer restrictions. The maximum purchase price is $270,000.

Learn more.

ADFA Down Payment Assistance Program

This program provides between $1,000 and $10,000 in closing cost assistance as a second mortgage with a 10-year term. Borrowers may receive cash back for expenses paid outside of closing.

Borrowers must qualify for an ADFA Move-Up first mortgage.

Learn more.

Arkansas Dream Down Payment Initiative

This program for low-income residents provides up to 10% of the home’s purchase price, with a maximum of $10,000, as a second mortgage without a monthly payment. It is forgivable over five years.

To qualify, borrowers must meet income requirements, complete the Pre-Purchase Homebuyer Education Class, use an approved lender and qualify for a mortgage. Specifically, this program must be used with the ADFA Move-Up loan program.

Learn more.

Rate shopping tips

When shopping for a mortgage, it’s important to follow these tips to ensure you find the best loan product for your financial situation.

Contact at least three lenders on the same day. Interest rates for mortgages change often, so you should consult three lenders on the same day to make sure you receive comparable rate offers.

Give each lender the same information. To make sure all loan estimates you receive are comparable, you need to give lenders the same financial information. This may include two months of paystubs, two to three months of bank statements and two years of W-2s and tax returns.

Confirm all lender fees and costs. Once you receive a loan estimate, add up all individual lender fees to ensure they equal the total costs listed.

Know when to lock in your rate. Because mortgage interest rates change frequently, you may find the great rate you were originally quoted has disappeared when you’re ready to proceed. Therefore, talk with your lender to gauge the market to see if that interest rate is likely to change before you are ready to move forward. You may want to lock in the rate so it will be the same as you continue the homebuying process. If the rate decreases after you lock it in, ask your lender about the “float down” option.

The information in this article is accurate as of the date of publishing.