North Dakota Mortgage Rates

Living in North Dakota

North Dakota has only about 760,000 residents, but lately it’s had an outsized reputation — and not just because of Fargo, the cult classic movie and TV show named after the state’s largest city.

In recent years, North Dakota garnered attention for a booming oil industry, as well as a high quality of life and strong housing market. North Dakota still has a very low unemployment rate, just 2.3% in March, verus 3.8% for the U.S. overall. Now, however, oil prices are down, home prices have softened, and buyers clearly have more leverage in the Peace Garden State.

By national standards, homes in North Dakota are still very reasonable. Earlier this year, the state’s median list price was just $225,000, up 3% from 2018, according to RealtyTrac, an online resource that provides housing and foreclosure data. According to Realtor.com, the median home listing price in Bismarck, the state capital, in February 2019 was $255,000, and it was $239,000 in Fargo. In a recent study, Realtor.com found that Bismarck is now a buyer’s market, which means the amount of homes for sale exceeds demand, leaving buyers in a better position to negotiate. Meanwhile, in Grand Forks, where the housing market was hot between 2012 and 2016, the balance has also shifted in favor of buyers.

The rules and costs of buying a home in North Dakota

Homebuying is governed by rules and regulations in every state. Read on for more about what to expect in North Dakota.

Home seller and buyer laws

North Dakota recently passed a property disclosure law that mandates sellers must disclose the overall condition of their homes, as well as any known defects or potential hazards, when a licensed real estate agent or broker is used in the sale of an owner-occupied property.

North Dakota is an equitable distribution state. This means in the case of divorce, a court decides how all assets — including real estate — will be fairly divided between the couple. This is different from a community property state, where assets are typically split equally. Courts in North Dakota also have the right to direct that either person in a divorcing party submit a proposed summary real estate judgement so that real estate can be formally transferred from one owner to another.

North Dakota is a judicial foreclosure state, which means the bank or lender must go to court to pursue a foreclosure. The state also allows for so-called deficiency judgments, which means a lender may be able to sue a borrower if the auction price a foreclosed home receives is less than the remaining value of the mortgage. This kind of judgement, however, is only allowed for properties that meet certain conditions, such as those not occupied by the owner or multifamily homes with more than four units.

Taxes

Potential buyers can expect one nice break in North Dakota: no real estate transfer taxes. Unlike most states, North Dakota does not charge these taxes, which pay for title transfer when a home is sold.

North Dakota does charge residents for property taxes. However, the state now ranks in the middle compared to other states. According to Tax-rates.org, the median property tax in North Dakota is now $1,658, based on a home value of $116,800. Statewide, the difference in average property tax varies from 0.46% to 1.87%, depending on the county, while the average property tax rate is 1.42% of a home’s assessed fair market value.

For homeowners still looking for relief from high property tax bills, it may help to know that North Dakota does offer property tax credits to disabled veterans, senior citizens, people with disabilities and low-income homeowners. To see if you’re eligible, check either this tax website or this one for disabled veterans.

Conforming loan limits

All North Dakota counties have a maximum conforming loan limit of $484,350.

Conforming loans are mortgages that adhere to guidelines and limits that have been set for Fannie Mae and Freddie Mac. These two government-sponsored enterprises set national loan limits each year, and the limits help bring liquidity and stability to the market for the conventional loans most consumers take on.

Conventional loans that conform to federal limits generally provide the best interest rates to consumers who have good credit. Loans with amounts above these limits are called jumbo loans, and they tend to be riskier and often come with higher interest rates.

Programs for homebuyers in North Dakota

The North Dakota Housing Finance Agency (NDHFA) offers a number of programs that can help buyers either get a more affordable mortgage or pay down payment and closing costs.

FirstHome

The FirstHome program provides affordable mortgages to low- and moderate-income buyers.

To qualify, you must:

  • Be a first-time homebuyer or have not owned a home in the last three years
  • Meet income limits, which vary depending on family size and county
  • Purchase a property that does not exceed certain price limits, depending on county
  • Pay $500
  • Meet normal credit underwriting standards
  • Occupy the home as your primary residence

Learn more.

HomeAccess

Low- and moderate-income buyers can apply for affordable mortgages through the HomeAccess program if they or members of their household are single parents, veterans, disabled persons, or over 65.

Each category has specific requirements for eligibility, as well as income and purchase price limits. You must be planning to use the home as your primary residence, and you must pay $500 as an out-of-pocket investment.

Learn more.

North Dakota Roots

The North Dakota Roots program is aimed at moderate-income buyers who have previously owned a home. It offers more generous income limits for buyers who plan to use their new home as a primary residence and are willing to pay $500. Loan amounts must conform to current lending limits.

Learn more.

Start

For eligible borrowers, the Start program offers both a lower-cost mortgage and help paying down payment and closing costs. In addition to NDHFA’s loan programs, the state agency also provides down payment and closing cost assistance to eligible borrowers.

Start is:

  • Available only to low- and moderate-income, first-time buyers
  • Only available to borrowers receiving a first mortgage from NDHFA
  • Not eligible to be used with other down payment assistance programs
  • Only to be used for single- or two-family properties (with one unit occupied by the borrower)

Learn more.

Rate shopping tips

Follow these tips to boost your chances of receiving the best possible mortgage rate.

Contact three or more lenders on the same day.

Gathering quotes from at least three lenders helps you find the best deal for your mortgage loan. Interest rates change daily and vary according to the lender. Closing costs vary by lender, too, so consider asking about them at the same time.

Give each lender the same information.

Stay consistent as you compare lenders to allow for the most direct comparisons. Before speaking with lenders, have the following information on hand:

  • The type of loan you’re considering (e.g., conventional, FHA, VA, jumbo)
  • Your FICO credit score
  • A loan amount (deduct your down payment from the home’s sale price)
  • The location of your potential new home
  • The type of property (e.g., single-family, multiple units, condominium)
  • How you plan to use your home (e.g., primary residence, vacation home, investment property)

 

Add up lender fees to determine the total loan cost.

It can pay to do the math yourself. Before choosing a lender, tally up lender origination fees (or underwriting charges) for processing a new loan application, credit report fees, property recording fees and the cost of points if you’re looking for a lower interest rate. The loan estimate you receive from your lender should break out fees. To compare total loan costs, also consider asking about the annual percentage rate (APR) for each loan, since an APR will include your base interest rate as well as associated fees.

Know when to lock in the rate.

If you’re ready to put an offer on a home, you’ll generally need a preapproval or pre-qualification letter in hand to be competitive with other buyers. Most lenders offer a rate lock with preapproval or pre-qualification, which means your quoted mortgage rate will be locked in for a period of 15 to 120 days even if market interest rates should change. Still, read the fine print first, as some lenders don’t offer a “float down” option if interest rates go down, instead of up.

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