Before you shop for a home in Missouri, learn about state laws that apply to both buying and owning a home in the state. Here’s an overview:
Missouri has fewer laws than many other states about what sellers of residential property must disclose to buyers. State law does require a seller to disclose whether their home has ever been a site for waste disposal or demolition landfills, or whether it served in any way that allowed the manufacture of the drug methamphetamine. Sellers also need to disclose any knowledge of contamination by radioactive or other hazardous material. As with most states, real estate agents are required to disclose any significant defects of which they are aware.
If you’re thinking of buying in Missouri, you should know that common law in the state appears to favor buyers when it comes to knowing whether a home comes with significant defects, according to Missouri REALTORS. To protect yourself from any unwelcome surprises, consider asking a local realtor for a seller property disclosure form.
Missouri allows both non-judicial and judicial foreclosures. That means a mortgage lender does not have to take a homeowner to court to foreclose on a residential property. Instead, lenders may follow a number of steps outside of a courtroom to first notify homeowners of an imminent foreclosure before filing a public notice and selling the home. As a buyer, you should also know Missouri law allows a lender to sue a homeowner to try to recover any money that might be owed if the home’s sale is less than the value of the mortgage.
Missouri is also an equitable distribution state, rather than a community property state. The distinction is important because it means that in the event of a divorce, all marital assets, including property, and debt must be divided fairly, but not necessarily with a 50/50 split.
In some states, a closing cannot proceed unless an attorney is present. Missouri allows for the use of a title company instead. A title company agent typically conducts the title search, prepares closing documents, oversees the signings, forwards payment to the lender and prepares and mails the title insurance policy.
Many states require buyers and/or sellers to pay real estate transfer taxes when a home changes hands, but Missouri does not.
Here’s more good news: According to Tax-Rates.org, Missouri has one of the lowest median property tax rates in the country. The median rate statewide is now 0.91% of a home’s assessed value, which works out to be $1,265 per year for a home with a median value of $139,700.
Still, your property taxes in Missouri will also depend on where you live. In St. Charles County, northwest of St. Louis, residents currently pay $2,377 per year, while residents in rural Shannon County to the south pay just $348 per year.
Like many states, Missouri offers a property tax credit for low-income seniors and homeowners and renters who are completely disabled or whose spouses are disabled. Renters who want to qualify need to have landlords who pay property taxes. The credit is good for up to $1,100 for homeowners and $750 for renters. Eligibility and the amount of the credit are based on household income and other factors.
The conforming loan limit throughout Missouri for a single-family home is now $484,350, the same as most of the rest of the U.S.
A conforming loan must meet limits that have been set for two government-sponsored enterprises, Fannie Mae and Freddie Mac. They buy conforming mortgages from lenders, bundle them into investments and guarantee the loans in case of default. This means conforming loans are able to offer better interest rates and lower monthly payments than so-called jumbo loans that exceed the limits.
Buying a home may be the largest purchase you’ll ever make, and the Missouri Housing Development Commission (MHDC) offers several homebuyer programs that can help make it more affordable. Read on for details:
Missouri’s First Place loan program helps provide a more affordable mortgage to first-time buyers and qualifying veterans. The loan can be used alone or together with a cash assistance loan that acts like a second mortgage, which can help pay down payment and closing costs. The cash assistance loan is equal to 4% of the first loan amount, and it is forgiven if the homeowner stays in the home for at least 10 years. After five years, the amount owed on this loan is reduced 1/60 every month.
To qualify for the First Place loan program, you must:
The Next Step Program provides a 30-year, fixed-rate loan that can be used for conventional, FHA, VA and USDA Rural Development mortgages. This program also offers down payment assistance, and first-time buyers can combine it with the mortgage credit certificate (see below). If you are buying a home in a specially designated opportunity area, you may be able to receive a slightly better interest rate.
In order to qualify for the Next Step Program, you must:
If you qualify for the mortgage credit certificate (MCC) offered by MHDC, you may be able to to lower your federal income tax bill every year for as long as you own and live in your home. The program offers a tax credit of 25% of the mortgage interest you pay in any given year, for an amount up to $2,000.
In order to qualify, you must: