Located in the Deep South, Arkansas has much to offer new and native residents. Beautiful scenery, burgeoning industry opportunities, and a plethora of available properties make Arkansas a great residential choice.
Arkansas has something for everyone when it comes to the real estate market. There is big city real estate available for those looking to stay close to work and a short drive from major dining and entertainment centers as well as agriculturally based properties for those looking to be at arm’s length from the hustle and bustle of a major city; as well as everything in between.
The more expensive average home prices are in the extreme northwestern corner of the state. Counties such as Boone, Carroll, Madison, Washington, and Newton all have median home prices of $213,000 and up. The eastern ridge of the state, counties like Mississippi, St. Francis, Lee, Phillips, Desha, and Ashley assert the lowest average prices, $91,000 and below. The central areas of the state are more in-sync with the national average, with counties such as Saline, Lonoke, Grant, Yell, and Hot Spring ranging between $137,000 and $168,000; with the national median home price hovering in the range of $173,000, location really does matter when it comes to the price of Arkansas real estate.
Little Rock is the capital city of Arkansas and the county seat of Pulaski County. It has the largest population in the state, with approximately 850,000 people, and offers its residents and visitors a great deal of entertainment opportunities. Little Rock has a healthy economic center, with corporations such as Dillard’s, Windstream Communications, and Acxiom headquartered there. Industries such as biotechnology, healthcare, information technology, and aerospace are all emerging to contribute to Arkansas’ overall economic welfare. Little Rock offers educational opportunities such as the University of Arkansas for Medical Sciences and the University of Arkansas at Little Rock campuses, as well as numerous museums, public libraries, cultural centers, and other notable places. Little Rock offers potential residents thousands of available properties from the center of the city all the way to its outlying suburbs. With properties ranging in price from $600,000 to $130,000, there are many options for homebuyers to choose from.
Fayetteville, Arkansas, is another popular Arkansas city. Located in the north central area of the state, Fayetteville is the seat of Washington County and has a population of 58,000 people; it is home to the University of Arkansas track and field program, and its popularity gave Fayetteville the nickname of “Track Capital of the World”. It ranks 8th on Forbes Magazine's “Top 10 Best Places in America for Business and Careers” and 7th on Kiplinger's 2008 "Best Cities to Work, Live and Play”. Notable places in Fayetteville include The Botanical Garden of the Ozarks, the University of Arkansas, and the Northwest Arkansas Mall. Major industries that contribute to Fayetteville’s economic climate include aerospace and national defense, computer services, agriculture, and consumer products. Corporations such as Apria, Bausch & Lomb, Hormel, Cargill, and Cisco all call Fayetteville home. Greater Fayetteville and its outlying areas offer over 1,500 real estate opportunities. From single-family homes to apartments, condominiums, or even land to develop, Fayetteville welcomes newbies!
Arkansas, especially the central and northwestern areas of the state, is overall one of the fastest growing states in America; with approximately 1,000 new families moving in each month, it seems that the state is already bursting at the seams. The capital city of Little Rock is one city that is experiencing gold rush-like expansion. Road construction, new commercial and residential construction, and jobs are blossoming in an economic climate that the rest of the country would envy. Fort Smith is undergoing a transformation that has those born in the area that left and returned scratching their heads and checking their GPS systems to see if they are in the right area; they are finding it almost unrecognizable. Low taxes, more millionaires per capita, and the beautiful Ozarks beckon new residents.
There are two types of mortgages popular in Arkansas. Fixed-rate mortgages, or FRMs, are those that include principle and interest in the monthly payment amount and are stable throughout the life of the loan, and adjustable-rate mortgages, or ARMs, are loans that include principle and interest that change periodically throughout the life of the loan. Both FRMs and ARMs are available in 10, 15, 20, 30, and even some 40 year increments, and can be either first mortgages, second mortgages, or refinance options.
Fixed-rate mortgages in Arkansas, just like other states, have interest rates based upon many factors, including inflation, the borrower’s credit score, employment situation, and debt to income ratio. This interest rate is the fee the lender assesses to the borrower; in other words, it is the cost of borrowing the money from the lender. When the borrower pays the money back, he or she also pays back the interest to the bank; this is how the bank makes money off mortgage loans. In an FRM situation, the interest rate is set and cannot change for the life of the loan; that is, the lender will charge this set rate in addition to the principle amount borrowed.
Adjustable-rate mortgages are the opposite. Instead of being a rate that does not change over the life of the loan, the rate adjusts periodically based upon the conditions of the loan. For instance, an ARM that adjusts on a monthly basis has an interest rate that will change every month; as a result, the mortgage payment amount will change each month. The benefit to an ARM is that in times of lower interest rates ARM borrowers will receive a lower interest rate, resulting in a lower monthly payment; the disadvantage to an ARM is that it is unpredictable, and in times of higher interest rates the monthly payment amount will rise. In some situations, the terms of the mortgage will place a cap on the interest rate adjustment or on the payment amount. This is advantageous because it sets a ceiling for how much the borrower will pay given a specific set of circumstances.
A primary mortgage is the first mortgage placed on a property; a second mortgage is just that, another mortgage placed on a property that already has one. It is subordinate to the first mortgage. In cases of default, primary mortgages are paid off, or satisfied, first, before a second mortgage is; as such, these mortgages are riskier for lenders and usually come with a higher interest rate. Second mortgages can also come in the form of home equity loans (HELOCs), and are typically used for home improvements or to obtain full financing on a property rather than pay private mortgage insurance.
Refinance mortgages are placed on properties to pay off first and/or second mortgages, normally because the borrower can obtain a lower rate, lower their monthly payments, or to pay off various forms of debt. Borrowers refinance to cash out their equity and use the money to pay bills or take care of other financial obligations; they can also refinance to shorten the length of a loan, or lengthen it to lower monthly payments.
Non-recourse states do not allow lenders to actively pursue a borrower who has defaulted on a mortgage. This is beneficial because the borrower is not held individually legally responsible for the outstanding loan amount. This is because when the loan is closed, the borrower must put up some kind of collateral to the lender to secure the loan in case of default; in most cases, this is the property the loan is being taken out for. As a result, if the borrower defaults on the loan, the lender can come and take the property back as satisfaction for the loan and nothing else. In recourse states the lender can come after the borrower for satisfaction by any means, including wage garnishments, liens, and legal actions.
Foreclosures in Arkansas are handled inside as well as outside of the court system. Either way, the lender must appraise the property before the scheduled foreclosure date.
In foreclosures handled through the court system, the court gets to decide the amount in default and then gives the borrower a brief amount of time to remit that amount to the lender. If the borrower is unable to pay the amount in full within that period, the property then is put up for sale; this is usually 30 days after the court first hears the matter.
In foreclosures handled outside of the court system, mortgages that contain “Power of Sale” clauses let lenders foreclose on property in default by filing a “Notice of Default” with the county. The borrower then has the opportunity to stop the foreclosure process and keep the property by paying the delinquent amount in full any time before the foreclosure sale occurs.
Arkansas has much to offer, including great real estate opportunities, a growing economy, popular cities, and rapid growth. Carefully considering purchasing property in Arkansas is important, and borrowers need to make sure they understand the different types of loans available and the consequences if those financial responsibilities go unfulfilled.