Learn about options for securing a South Dakota mortgage loan.
Consumers looking for a South Dakota mortgage have a variety of options. There are plenty of lenders willing to negotiate conventional mortgages for homebuyers with good credit and enough money for a down payment. However, South Dakota lenders offers a host of other options including first-time homebuyer's assistance, closing cost and down-payment assistance, and assistance for groups such as veterans, those with low income and disabled people.
South Dakota lenders offer a full range of conventional mortgages for consumers with adequate income and the ability to pay the down payment and closing costs. There are a host of fixed-rate, adjustable and balloon mortgages that can suit a variety of income levels. Fixed-rate mortgages typically range from 15 to 30 years and the interest rate is fixed for the life of the loan. Adjustable-rate mortgages (ARMs) usually have a lower entrance interest rate; however, after a fixed amount of time, the interest rate adjusts up or down on an annual basis. A balloon mortgage, like a fixed-rate mortgage, has a constant interest rate over the life of the loan, but will require a substantial payment at the end of the loan term. Many lenders also offer hybrid mortgage types that combine one or more of the basic conventional mortgages.
The South Dakota Housing Development Authority established the Governor's House Program in the mid-1990s to build affordable houses for low-income individuals and families, the elderly and individuals with disabilities. More than 1,700 homes have been sold since the program's inception. Each house costs about $33,000 and all are 1,008 square feet with the same simple design. The houses are built with the assistance of prison inmates who participate in a training program. Families of three or more with an annual income of $40,250 or less may qualify for the program. To be eligible for the program, individuals aged 62 or older may not have a net worth exceeding $175,000 with liquid assets of less than $100,000. Families must not have a net worth exceeding $90,000.
Eligible first-time homebuyers in South Dakota can take advantage of the First-Time Homebuyers Program, which provides low-interest-rate mortgages and purchasing assistance through participating lenders. The program includes a variety of interest-rate options. For instance, the increasing rate option starts at a very low rate and increases gradually until reaching a low- to- normal fixed rate. The fixed-rate option maintains a low fixed rate through the life of the loan or a higher fixed-rate plan that offers cash assistance up front for homebuyers who need closing-cost assistance.
The South Dakota Housing Development Authority provides an extensive list of lenders who participate in the first-time homebuyers program. The program is confined by federal regulations with regard to income level and purchase price of the home. Income limits vary by county, region and family size. Veterans may also take advantage of this program even if they're not first-time homeowners.
For many homebuyers, finding the money for closing costs and the down payment can be the biggest hurdle when purchasing a home. The South Dakota Housing Development Authority Employee Mortgage Assistance Program (EMAP) can offer prospective homebuyers the assistance they need to purchase a home by providing a low-interest loan to help cover closing costs and a down payment. Typically, participating employers offer loans for 2 percent interest over five years.
People who do not work for a participating employer can look into NeighborWorks Dakota Home Resources, which is an alternative program for individuals and families looking for help with closing costs and down payments. Eligible individuals or families can receive a zero percent interest rate loan over a five-year period for their closing costs and down payments up to $3,000.
Several Federal mortgage programs that are available in South Dakota include Veteran (VA) loans or Federal Housing Authority (FHA) loans. These mortgage loans are guaranteed by the federal government and are limited by income or veteran status. These mortgages have different requirements and regulations but both are served through participating lenders There is a list of South Dakota agencies on the U.S. Department of Housing and Urban Development Web site.