The Buying Process: A Summary
- In Arkansas, the process is largely the same as most other states. The transactions can be closed by an attorney or a title-company representative.
- After reaching an agreement on price, you will need to negotiate purchase details with the seller.
- Although you have been pre-qualified, now that you have a home to purchase you will need to finalize the mortgage.
- Some fees in Arkansas are paid by the seller, while others are paid by the buyer.
- You will meet with the seller (when possible) at the closing table to sign all documents.
- Throughout the state of Arkansas, the limit for a conforming loan on a single-family house is $647,200. These are the base limits used throughout most of the country.
Buying a Home, Phase 1: Negotiations for Your Arkansas Home
Congratulations! You have had an offer accepted by a home seller. This is a major milestone, but the process is just getting started. The next step is to finalize the details of your purchase agreement.
- When you have an offer accepted, both you and the seller will sign a purchase contract.
- You will need to make a payment called “earnest money.” This is a small payment, usually a couple hundred dollars (although it can reach into the thousands), that shows your commitment to purchasing the home. It will be delivered to the attorney or title company and released back to you once the purchase is final. (If you back out of the purchase for illegitimate reasons, the earnest money is given to the seller.)
- The signed contract is sent to the title company or attorney so they can start a title search. They will also prepare documents for transferring the title.
- You will, at some point, receive disclosures from the seller. These are simply statements of known issues with the home, such as roof damage, seepage, drafty windows, or other potential problems. You should review these disclosures and work them into your final negotiations.
- You’ll now have the opportunity to complete inspections. A general inspection is usually recommended, although specific inspections for termites, mold, or other home problems could be required.
- A lead paint inspection is recommended for homes that were built before 1978. Sellers are required to disclose their knowledge of lead paint in the home.
- If any problems are found during the inspections, you can request changes to the purchase contract. The seller can accept the changes or offer a negotiated solution. Although rare, they can also reject the requests entirely. You and the seller will negotiate until an agreement is reached
- The seller has until the final closing to make any repairs that are part of the purchase contract or negotiations.
Phase 2: The Mortgage Process in Arkansas
Although you have been pre-qualified for a loan, you’ll now need to formally and officially complete the mortgage. This process takes time, so it’s best to start as early as possible.
- You will need to fill out a formal application. This can be done on your own, or you can get the help of a qualified professional.
- In about three days, you should receive a “good faith estimate” from the lender. This is simply an estimate of the final costs for closing the loan.
- You may have supplied documents to the lender, but they will need updated information, which may include:
- Pay stubs for at least the past month
- Tax returns for roughly two years
- Bank statements on all accounts you currently own
- Loan documents for any debts, including student and car loans
- Financial disclosures that impact your financial situation, such as alimony or child support
- Explanation on any credit inquiries
- Information on any large deposits outside of your regular income
- If a gift will be used for a downpayment, you and the gift giver will need to furnish a gift letter.
- Repeat or updated information on any of the above
4. Once the lender has all your information, they will make a decision. Assuming you are approved, you’ll receive a loan commitment letter, which states their intentions to make the loan. This commitment will come with conditions, including the need for a home appraisal to ensure the property has a strong value.
5. You should send a copy of the loan commitment letter to the seller or seller’s agent.
6. An appraisal will be ordered. Assuming the appraisal comes back with a good number, you can move forward with the purchase. If the appraisal is lower than expected, changes may be required.
7. Homeowner’s insurance will need to be ordered, and you should obtain proof of this insurance and send it to the lender. For Arkansas properties, homeowners’ insurance is usually a requirement.
Phase 2 can seem complex, but if you work with your lending professional the process is fairly simple and straightforward. It just takes time. Gather and organize your documents as early as possible so you can hit the ground running when your purchase offer is accepted.
Phase 3: The Final Closing in Arkansas
Congratulations! Most of the heavy lifting has been done; all you need to do now is pay the remaining costs and fees and finalize the purchase. This is done through a “closing,” which is held at the office of the attorney, title company, or agent. In Arkansas, it’s customary for both parties to meet together at the same time, although this is not always possible.
- Before the closing, the attorney or title company should have started the process of preparing the documents for closing the sale. They should also have completed a title search, which verifies that the title is free and clear and the property can be sold.
- A final number is calculated for your closing. This is the amount you’ll need, usually in a cashier’s check, to complete the purchase. It will include closing costs, property taxes, and other expenses.
- Right before the meeting, you will complete a walkthrough to make sure the property is still in decent shape.
- You’ll now meet at the closing table to sign all documents.
- You will pay the remaining funds of your downpayment to the attorney or representative.
- The transaction will be recorded with the municipality. This could be the city or county where the property is located.
- You’ll now get the keys to your property and can move into your fantastic new home!
There are a variety of fees that need to be paid for your Arkansas purchase. In Arkansas, attorney and abstract fees are usually paid by the seller, while the buyer pays the recording and filing fees. Escrow and transfer fees are usually divided equally or negotiated.
Arkansas Conforming Loan Limits
Limits for conforming loans, which includes a long list of government-supported mortgages, such as FHA loans, VA loans, and loans supported by Fannie Mae and Freddie Mac, which are often referred to as “conventional” loans. These loans all “conform” to the limits set by the Federal Housing Finance Agency (FHFA).
In the state of Arkansas, the limit is $647,200 for a single-family property. These are the limits on rural counties as well as high-population areas. Cities like Little Rock, the capital, as well as Fort Smith, Fayetteville, and other towns with larger populations or higher costs of property use these limits.
It’s possible to purchase a multiunit property in the state of Arkansas with a conforming loan. In the state, the limit for a two-unit property is $828,700, while the limit rises to $1,001,650 for a three-unit property. When purchasing a four-unit Arkansas property with a conforming loan, the limit is $1,244,850.
These are the limits for conforming loans only. If you need a larger loan, there are other options available. Talk to our team about Arkansas jumbo loans today.
Note: Conforming limits are constantly changing, and the numbers cited above may no longer be relevant. For updated and accurate conforming limits, contact a lending professional in your area.
Arkansas Downpayment Assistance Programs
Borrowers in the state of Arkansas may have trouble saving for a downpayment. Fortunately, there are downpayment assistance programs, knowns as “DPAs,” that can help you overcome this major hurdle.
Programs Available Throughout all of Arkansas
Most of the statewide support is available through the Arkansas Development Finance Authority (ADFA), which has a couple of programs that provide downpayment assistance.
Arkansas Dream Down Payment Initiative (ADDI)
The ADDI program provides low-income homebuyers in Arkansas with the chance to receive up to $25,000 in support. This funding can be used for closing costs and downpayments, and acts as a second mortgage with no monthly payment. If less than $15,000 is received by the homeowner, the loan can be forgiven after five years. If more than $15,000 is received, it can be forgiven after ten years.
Arkansas DPA
The other program provided by the ADFA is a simple DPA program. This program offers buyers assistance between $1,000 and $15,000 for closing costs and comes as a second mortgage with a ten-year term.
Major Local Programs in Arkansas
Many cities, counties, and regions have downpayment assistance for Arkansas homebuyers. Here are a few examples of local DPA programs in Arkansas…
Little Rock Downpayment Assistance
The City of Little Rock’s Department of Housing and Neighborhood Programs offers downpayment assistance for low- and moderate-income buyers. Eligible homebuyers in the state’s capital can receive up to 6% of the purchase price, but assistance cannot exceed $5,000.
Jonesboro Homeownership Assistance
The Grants and Community Development team in Jonesboro, Arkansas provides downpayment support through their “Homeownership Assistance” program. Totals vary but this program can help fund a downpayment that results in a safe, comfortable property.
Requirements for Using Arkansas Downpayment Assistance
Each program has different requirements, but these programs are generally reserved for low-income buyers who are purchasing a single-family home that will be occupied for at least five years.
Income qualification is the most common requirement. To use DPA programs in Arkansas, you’ll need to verify that your income is relatively low (or at least not high) compared to the area’s median or average income.
Many programs require that you are a first-time buyer, although buyers who have not owned property in the past three years may still be eligible.
Local programs also require that the home is located within their jurisdiction. For example, the Little Rock Downpayment Assistance program requires that the home being purchased is located within the city limits.
Details are always changing, and new programs are created every year. Contact our team for the latest downpayment assistance in your area.
