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