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Home Mortgage Rates in North Dakota

Beautiful Sunset.

The affects of the recent financial crisis have been felt at multiple levels of the economy, perhaps most significantly in the housing market. North Dakota real estate has been impacted as one would have expected, with average home prices falling in line with national averages. The most active areas of growth, and the locations with the highest average home values are Fargo, Bismarck & Grand Forks. Ultimately, the mortgage and foreclosure options and procedures apply to all areas of the state and understanding them is important to navigating the North Dakota real estate market. Williston's economy is highly reliant on the oil industry & it's population has nearly doubled since 2010 due to the shale oil boom.

Downtown Fargo.

Places to Live

Metropolitan Areas

ND Rank US Rank Metropolitan Area 2016 Pop 2010 Pop Change % △
1 192 Fargo, ND-MN Metro Area 238,124 208,777 29,347 14.06%
2 312 Bismarck 131,635 114,778 16,857 14.69%
3 374 Grand Forks, ND-MN Metro Area 102,743 98,461 4,282 4.35%
4 451 Minot 78,723 69,540 9,183 13.21%
5 769 Williston 34,337 22,398 11,939 53.30%
6 806 Dickinson 31,199 24,199 7,000 28.93%
7 881 Wahpeton, ND-MN Micro Area 22,711 22,897 -186 -0.81%
8 898 Jamestown 21,128 21,100 28 0.13%

Home Price Levels

Grand Forks.

After the fallout from the 2008 great recession, the prices of homes in North Dakota have declined by 20 to 30%, depending on which part of the state one focuses on. The rural parts of the state have remained more stable, but the highest concentration of highly valued home is around the two largest cities, Fargo and Bismarck. Recent data shows that the average home value for the state was between $175,000, and $220,000.

The interesting phenomenon in North Dakota is the large portions of the state have revealed no homes on the market in recent research. This is explained, in part, by the unpopulated areas of the state, but the other, more interesting explanation, is that the state is very stable. This information gives experts two primary clues: on the one hand, residents may be attempting to weather the storm; on the other hand, a lack of active homes for sale means that data is more likely to be skewed. The boom in fracking oil and natural gas resources has caused a significant increase in rents around energy exploration areas like the Bakken Shale formation.

North Dakota Census Data

According to the United States Census an estimated 757,952 people live in the state of North Dakota. The state has 69,000.8 mi² of land area, which gave it a population density of 10.98 per mi². Here is a list of cities, towns & Census Designated Places with more than 100 residents, with their estimated population as of June 2016 & the 2010 United States Census. For Census Designated Places (CDP) where there was no population estimate available for 2016 the 2011-2015 American Community Survey 5-Year Estimates data was used.

All table columns are sortable. Click on the column headers to sort by that column. Click again to sort low to high. Cities with higher levels of population growth typically see the increased demand drive faster real estate price appreciation.

Rank Geography County 2016 Pop 2010 Pop Change % △ Land mi² Pop Den mi²
1 Fargo Cass 120,762 105,549 15,213 14.41% 48.82 2,473.62
2 Bismarck Burleigh 72,417 61,272 11,145 18.19% 30.84 2,348.15
3 Grand Forks Grand Forks 57,339 52,838 4,501 8.52% 19.9 2,881.36
4 Minot Ward 48,743 40,888 7,855 19.21% 17.43 2,796.50
5 West Fargo Cass 34,858 25,830 9,028 34.95% 14.44 2,413.99
6 Williston Williams 26,426 14,716 11,710 79.57% 7.5 3,523.47
7 Dickinson Stark 22,993 17,787 5,206 29.27% 9.96 2,308.53
8 Mandan Morton 21,769 18,331 3,438 18.76% 11.03 1,973.62
9 Jamestown Stutsman 15,440 15,427 13 0.08% 12.83 1,203.43
10 Wahpeton Richland 7,830 7,766 64 0.82% 5.29 1,480.15
11 Devils Lake Ramsey 7,315 7,141 174 2.44% 6.5 1,125.38
12 Valley City Barnes 6,566 6,585 -19 -0.29% 3.46 1,897.69
13 Watford City McKenzie 6,390 1,744 4,646 266.40% 1.4 4,564.29
Minot AFB CDP Ward 5,890 5,521 369 6.68% 7.35 801.36
14 Grafton Walsh 4,245 4,284 -39 -0.91% 3.4 1,248.53
15 Lincoln Burleigh 3,683 2,406 1,277 53.08% 1.12 3,288.39
16 Beulah Mercer 3,376 3,121 255 8.17% 2.49 1,355.82
17 Rugby Pierce 2,815 2,876 -61 -2.12% 1.94 1,451.03
18 Stanley Mountrail 2,686 1,458 1,228 84.22% 1.82 1,475.82
Grand Forks AFB CDP Grand Forks 2,663 2,367 296 12.51% 8.13 327.55
19 Horace Cass 2,652 2,430 222 9.14% 10.77 246.24
20 New Town Mountrail 2,528 1,925 603 31.32% 1.28 1,975.00
21 Casselton Cass 2,513 2,329 184 7.90% 1.87 1,343.85
22 Hazen Mercer 2,422 2,411 11 0.46% 1.27 1,907.09
23 Bottineau Bottineau 2,284 2,211 73 3.30% 1.09 2,095.41
24 Lisbon Ransom 2,124 2,154 -30 -1.39% 2.25 944.00
25 Carrington Foster 2,043 2,065 -22 -1.07% 2.11 968.25
Belcourt CDP Rolette 1,904 2,078 -174 -8.37% 5.81 327.71
26 Mayville Traill 1,830 1,858 -28 -1.51% 1.92 953.13
27 Oakes Dickey 1,781 1,856 -75 -4.04% 1.64 1,085.98
28 Langdon Cavalier 1,780 1,878 -98 -5.22% 1.65 1,078.79
29 Harvey Wells 1,743 1,783 -40 -2.24% 1.88 927.13
30 Bowman Bowman 1,713 1,650 63 3.82% 1.53 1,119.61
31 Hillsboro Traill 1,586 1,603 -17 -1.06% 1.09 1,455.05
32 Tioga Williams 1,547 1,230 317 25.77% 1.31 1,180.92
33 Garrison McLean 1,532 1,453 79 5.44% 1.38 1,110.14
34 Crosby Divide 1,406 1,070 336 31.40% 1.37 1,026.28
Shell Valley CDP Rolette 1,396 1,197 199 16.62% 15 93.07
35 New Rockford Eddy 1,390 1,391 -1 -0.07% 1.51 920.53
36 Park River Walsh 1,373 1,403 -30 -2.14% 2.17 632.72
37 Surrey Ward 1,365 934 431 46.15% 0.98 1,392.86
38 Rolla Rolette 1,325 1,280 45 3.52% 1.43 926.57
39 Larimore Grand Forks 1,304 1,346 -42 -3.12% 0.59 2,210.17
40 Washburn McLean 1,303 1,246 57 4.57% 1.79 727.93
41 Ellendale Dickey 1,286 1,394 -108 -7.75% 1.52 846.05
Fort Totten CDP Benson 1,284 1,243 41 3.30% 8.6 149.30
42 Velva McHenry 1,265 1,084 181 16.70% 0.83 1,524.10
43 Parshall Mountrail 1,253 903 350 38.76% 0.55 2,278.18
44 Cavalier Pembina 1,241 1,302 -61 -4.69% 0.82 1,513.41
45 Hettinger Adams 1,226 1,226 0 0.00% 0.85 1,442.35
46 Burlington Ward 1,191 1,060 131 12.36% 0.64 1,860.94
47 Killdeer Dunn 1,173 751 422 56.19% 0.94 1,247.87
48 Cando Towner 1,116 1,115 1 0.09% 0.63 1,771.43
49 Beach Golden Valley 1,094 1,019 75 7.36% 1.93 566.84
50 Kenmare Ward 1,059 1,096 -37 -3.38% 1.24 854.03
51 Linton Emmons 1,022 1,097 -75 -6.84% 0.75 1,362.67
52 Belfield Stark 1,013 800 213 26.63% 1.08 937.96
53 Thompson Grand Forks 1,011 986 25 2.54% 0.46 2,197.83
54 Wishek McIntosh 952 1,002 -50 -4.99% 1.44 661.11
55 Walhalla Pembina 950 996 -46 -4.62% 1.05 904.76
56 Mapleton Cass 946 762 184 24.15% 4 236.50
57 Cooperstown Griggs 928 984 -56 -5.69% 0.97 956.70
58 New Salem Morton 922 946 -24 -2.54% 1.46 631.51
59 Northwood Grand Forks 917 945 -28 -2.96% 1.27 722.05
60 LaMoure LaMoure 909 889 20 2.25% 1.32 688.64
Cannon Ball CDP Sioux 908 875 33 3.77% 88.27 10.29
61 Hankinson Richland 899 919 -20 -2.18% 1.59 565.41
62 Enderlin Ransom & Cass 868 886 -18 -2.03% 1.44 602.78
63 Gwinner Sargent 853 753 100 13.28% 2.08 410.10
64 Harwood Cass 807 718 89 12.40% 1.26 640.48
Mandaree CDP McKenzie 806 596 210 35.23% 11.21 71.90
65 Mohall Renville 799 783 16 2.04% 1.08 739.81
66 Dunseith Rolette 799 773 26 3.36% 1 799.00
67 Ray Williams 796 592 204 34.46% 1.01 788.12
68 Napoleon Logan 787 792 -5 -0.63% 1.4 562.14
Green Acres CDP Rolette 784 575 209 36.35% 1.5 522.67
69 Drayton Pembina 781 824 -43 -5.22% 0.65 1,201.54
70 Mott Hettinger 773 721 52 7.21% 0.9 858.89
71 Underwood McLean 771 778 -7 -0.90% 0.91 847.25
72 Hatton Traill 765 777 -12 -1.54% 0.61 1,254.10
73 Kindred Cass 755 692 63 9.10% 1.45 520.69
74 Glen Ullin Morton 741 807 -66 -8.18% 1.04 712.50
75 Wilton McLean & Burleigh 727 711 16 2.25% 0.63 1,153.97
76 Steele Kidder 709 715 -6 -0.84% 0.57 1,243.86
Four Bears Village CDP McKenzie 702 517 185 35.78% 1.04 675.00
77 Ashley McIntosh 699 749 -50 -6.68% 0.63 1,109.52
78 Hebron Morton 692 747 -55 -7.36% 1.49 464.43
79 Lakota Nelson 644 672 -28 -4.17% 1.03 625.24
80 Milnor Sargent 644 653 -9 -1.38% 0.94 685.11
81 Elgin Grant 634 642 -8 -1.25% 1.05 603.81
82 New England Hettinger 633 600 33 5.50% 0.49 1,291.84
83 Lidgerwood Richland 628 652 -24 -3.68% 0.66 951.52
84 Rolette Rolette 611 594 17 2.86% 0.99 617.17
85 Minto Walsh 610 604 6 0.99% 1.42 429.58
86 Reile's Acres Cass 594 513 81 15.79% 0.48 1,237.50
87 Portland Traill 593 606 -13 -2.15% 0.86 689.53
East Dunseith CDP Rolette 587 500 87 17.40% 5.13 114.42
88 Turtle Lake McLean 585 581 4 0.69% 0.51 1,147.06
89 Pembina Pembina 563 592 -29 -4.90% 0.76 740.79
90 Center Oliver 563 571 -8 -1.40% 0.46 1,223.91
91 Towner McHenry 563 533 30 5.63% 0.81 695.06
92 Edgeley LaMoure 550 563 -13 -2.31% 0.75 733.33
93 Richardton Stark 543 529 14 2.65% 0.36 1,508.33
94 Forman Sargent 528 504 24 4.76% 0.7 754.29
95 Berthold Ward 495 454 41 9.03% 0.37 1,337.84
96 Argusville Cass 474 475 -1 -0.21% 4.01 118.20
97 Fessenden Wells 464 479 -15 -3.13% 0.45 1,031.11
98 Glenburn Renville 462 380 82 21.58% 0.25 1,848.00
99 Leeds Benson 447 427 20 4.68% 0.45 993.33
100 Finley Steele 437 445 -8 -1.80% 3.47 125.94
101 Emerado Grand Forks 428 414 14 3.38% 0.31 1,380.65
102 South Heart Stark 423 301 122 40.53% 0.94 450.00
103 Westhope Bottineau 419 429 -10 -2.33% 0.33 1,269.70
104 Wyndmere Richland 418 429 -11 -2.56% 0.88 475.00
105 Strasburg Emmons 385 409 -24 -5.87% 0.3 1,283.33
White Shield CDP McLean 384 336 48 14.29% 3.8 101.05
106 Maddock Benson 380 382 -2 -0.52% 0.89 426.97
107 McClusky Sheridan 378 380 -2 -0.53% 0.39 969.23
108 Manvel Grand Forks 375 360 15 4.17% 0.29 1,293.10
109 Fairmount Richland 365 367 -2 -0.54% 0.32 1,140.63
110 Arthur  Cass 363 337 26 7.72% 1.52 238.82
111 Stanton Mercer 361 366 -5 -1.37% 0.47 768.09
112 St. John Rolette 361 341 20 5.87% 0.45 802.22
113 Bowbells Burke 359 336 23 6.85% 0.8 448.75
114 Neche Pembina 358 371 -13 -3.50% 0.35 1,022.86
115 Gladstone Stark 357 239 118 49.37% 0.34 1,050.00
116 Max McLean 354 334 20 5.99% 0.78 453.85
117 Kulm LaMoure 343 354 -11 -3.11% 0.38 902.63
118 Sawyer Ward 338 357 -19 -5.32% 0.48 704.17
119 McVille Nelson 336 349 -13 -3.72% 1.44 233.33
120 St. Thomas Pembina 316 331 -15 -4.53% 1.06 298.11
121 Buxton Traill 316 323 -7 -2.17% 0.2 1,580.00
122 Oxbow Cass 311 305 6 1.97% 0.42 740.48
123 Alexander McKenzie 303 223 80 35.87% 1.43 211.89
124 Medina Stutsman 302 308 -6 -1.95% 1.02 296.08
125 Reynolds Traill & Grand Forks 300 301 -1 -0.33% 0.67 447.76
126 Grenora Williams 294 244 50 20.49% 0.61 481.97
127 Powers Lake Burke 293 280 13 4.64% 0.99 295.96
128 Gackle Logan 291 310 -19 -6.13% 0.54 538.89
129 Carson Grant 288 293 -5 -1.71% 4.02 71.64
130 Drake McHenry 288 275 13 4.73% 1.97 146.19
131 Scranton Bowman 284 281 3 1.07% 0.9 315.56
132 Michigan City Nelson 277 294 -17 -5.78% 0.51 543.14
133 Granville McHenry 273 241 32 13.28% 0.27 1,011.11
134 Hope Steele 265 258 7 2.71% 0.62 427.42
135 Hunter Cass 260 261 -1 -0.38% 1.51 172.19
136 Abercrombie Richland 259 263 -4 -1.52% 0.61 424.59
137 Tower City Cass & Barnes 258 253 5 1.98% 2.08 124.04
138 Davenport Cass 257 252 5 1.98% 0.27 951.85
139 Anamoose McHenry 253 227 26 11.45% 0.61 414.75
140 Lansford Bottineau 249 245 4 1.63% 0.35 711.43
141 Sherwood Renville 249 242 7 2.89% 0.31 803.23
142 Zap Mercer 242 237 5 2.11% 1.04 232.69
143 Lignite Burke 240 155 85 54.84% 0.14 1,714.29
144 Page Cass 239 232 7 3.02% 0.18 1,327.78
145 Walcott Richland 236 235 1 0.43% 1.02 231.37
146 Hoople Walsh 233 242 -9 -3.72% 0.36 647.22
147 Gilby Grand Forks 231 237 -6 -2.53% 0.17 1,358.82
148 Leonard Cass 228 223 5 2.24% 0.75 304.00
149 Riverdale McLean 228 205 23 11.22% 1.35 168.89
150 Minnewaukan Benson 224 224 0 0.00% 0.27 829.63
Porcupine CDP Sioux 222 146 76 52.05% 0.2 1,110.00
151 Hazelton Emmons 221 235 -14 -5.96% 0.36 613.89
Ruthville CDP Ward 220 191 29 15.18% 0.15 1,466.67
152 New Leipzig Grant 219 221 -2 -0.90% 0.89 246.07
153 Flasher Morton 215 232 -17 -7.33% 0.7 307.14
Harmon CDP Morton 212 145 67 46.21% 1.57 135.03
154 Fort Yates Sioux 210 184 26 14.13% 0.06 3,500.00
155 Wimbledon Barnes 209 216 -7 -3.24% 0.53 394.34
156 Frontier Cass 208 214 -6 -2.80% 0.19 1,094.74
157 Aneta Nelson 207 222 -15 -6.76% 0.99 209.09
158 Halliday Dunn 205 188 17 9.04% 0.46 445.65
159 Fordville Walsh 204 212 -8 -3.77% 1.01 201.98
Logan CDP Ward 204 194 10 5.15% 1.46 139.73
160 Munich Cavalier 202 210 -8 -3.81% 1.43 141.26
161 Tappen Kidder 201 197 4 2.03% 1.05 191.43
162 Des Lacs Ward 199 204 -5 -2.45% 0.53 375.47
163 Plaza Mountrail 199 171 28 16.37% 1.12 177.68
164 Sheyenne Eddy 198 204 -6 -2.94% 0.16 1,237.50
165 Mooreton Richland 194 197 -3 -1.52% 0.27 718.52
166 Buffalo Cass 191 188 3 1.60% 0.23 830.43
167 Edinburg Walsh 189 196 -7 -3.57% 0.31 609.68
168 Sanborn Barnes 188 192 -4 -2.08% 0.55 341.82
169 Dunn Center Dunn 186 146 40 27.40% 0.39 476.92
170 Petersburg Nelson 180 192 -12 -6.25% 1.03 174.76
171 Golden Valley Mercer 178 182 -4 -2.20% 0.73 243.84
172 Edmore Ramsey 176 182 -6 -3.30% 0.27 651.85
173 Selfridge Sioux 176 160 16 10.00% 0.27 651.85
174 Rhame Bowman 175 169 6 3.55% 1.5 116.67
175 Grandin Cass & Traill 174 173 1 0.58% 0.17 1,023.53
176 Binford Griggs 172 183 -11 -6.01% 0.35 491.43
177 Taylor Stark 170 148 22 14.86% 0.5 340.00
178 Regent Hettinger 169 160 9 5.63% 0.56 301.79
179 Litchville Barnes 168 172 -4 -2.33% 1.48 113.51
180 Streeter Stutsman 166 170 -4 -2.35% 0.35 474.29
181 Willow City Bottineau 164 163 1 0.61% 0.45 364.44
182 Kensal Stutsman 159 163 -4 -2.45% 0.6 265.00
183 Rutland Sargent 159 163 -4 -2.45% 0.38 418.42
184 Reeder Adams 158 162 -4 -2.47% 0.62 254.84
185 Tolna Nelson 157 166 -9 -5.42% 0.76 206.58
186 Christine Richland 157 150 7 4.67% 0.19 826.32
187 Wing Burleigh 155 152 3 1.97% 0.59 262.71
188 Arnegard McKenzie 153 115 38 33.04% 0.25 612.00
189 Portal Burke 150 126 24 19.05% 0.56 267.86
Erie CDP Cass 149 50 99 198.00% 2.01 74.13
190 Carpio Ward 148 157 -9 -5.73% 0.59 250.85
191 Makoti Ward 148 154 -6 -3.90% 0.2 740.00
192 Columbus Burke 147 133 14 10.53% 0.27 544.44
193 Upham McHenry 145 130 15 11.54% 0.33 439.39
194 Colfax Richland 145 121 24 19.83% 1.02 142.16
195 Marmarth Slope 144 136 8 5.88% 2.5 57.60
196 Crary Ramsey 141 142 -1 -0.70% 0.89 158.43
197 Pick City Mercer 136 123 13 10.57% 0.18 755.56
198 Marion LaMoure 133 133 0 0.00% 0.84 158.33
199 Medora Billings 132 112 20 17.86% 0.36 366.67
200 Wildrose Williams 132 110 22 20.00% 0.29 455.17
201 Crystal Pembina 131 138 -7 -5.07% 0.65 201.54
202 Bowdon Wells 130 131 -1 -0.76% 0.25 520.00
Englevale CDP Ransom 130 40 90 225.00% 1.49 87.25
203 Bisbee Towner 128 126 2 1.59% 0.26 492.31
204 Osnabrock Cavalier 125 134 -9 -6.72% 0.3 416.67
205 Noonan Divide 125 121 4 3.31% 0.3 416.67
206 Adams Walsh 124 127 -3 -2.36% 1 124.00
207 Hannaford Griggs 123 131 -8 -6.11% 0.22 559.09
208 Forest River Walsh 123 125 -2 -1.60% 0.5 246.00
209 Almont Morton 123 122 1 0.82% 2.64 46.59
210 Oriska Barnes 123 118 5 4.24% 0.28 439.29
211 Sheldon Ransom 123 116 7 6.03% 0.22 559.09
212 Deering McHenry 119 98 21 21.43% 0.07 1,700.00
213 Starkweather Ramsey 115 117 -2 -1.71% 0.14 821.43
214 Sykeston Wells 113 117 -4 -3.42% 0.38 297.37
215 Newburg Bottineau 113 110 3 2.73% 0.13 869.23
216 Epping Williams 112 100 12 12.00% 0.38 294.74
217 Buchanan Stutsman 111 90 21 23.33% 0.08 1,387.50
218 Ross Mountrail 110 97 13 13.40% 0.28 392.86
219 Galesburg Traill 106 108 -2 -1.85% 0.17 623.53
220 Pisek Walsh 104 106 -2 -1.89% 0.12 866.67
221 Oberon Benson 104 105 -1 -0.95% 0.34 305.88
222 Rocklake Towner 103 101 2 1.98% 0.22 468.18
223 Dazey Barnes 101 104 -3 -2.88% 0.38 265.79
224 Dodge Dunn 101 87 14 16.09% 0.47 214.89

Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016
Source: U.S. Census Bureau, Population Division
Release Date: May 2017.Natural Gas Well.

Mortgage Mechanics

Traditional Mortgages – Under the most common type of mortgage in the United States, a lender supplies the borrower with the money needed to by a property and then places a lien against that property until the debt is retired. The lender is known as the mortgagor and the borrower is known as the mortgagee. In the event of a default, these parties have opposing interests and must involve a court to resolve the dispute (see the discussion of judicial foreclosures below). This is the only type of mortgage available in North Dakota.

Other types of mortgages, specifically deed in trust mortgages, are not permitted in North Dakota. This means that only judicial foreclosures are permitted (see the section on foreclosure below). This is important to understand, because it affects the types of mortgages available to some extent. It also has a dramatic affect on foreclosure procedures and the recourse available to lenders when borrowers default.

Available Mortgage Types in North Dakota

As of 2017 the conforming loan limit across the United States is set to $424,100, with a ceiling of 150% that amount in areas where median home values are higher. High local affordability makes the $424,100 ceiling apply statewide for single unit homes. Dual unit homes have a limit of $543,000, triple unit homes have a limit of $656,350 & quadruple unit homes have a limit of $815,650. People buying premium properties in the Fargo metro area may be above these thresholds, requiring a jumbo loan. Jumbo loans typically have a slightly higher rate of interest than conforming mortgages, though spreads vary based on credit market conditions.

Fixed Rate Mortgages – The 30-year fixed rate mortgage is the most common mortgage type in use today. Also available with a 15-year term, a fixed rate mortgage gives the borrower a set monthly payment for the duration of the loan. The rates on this type of loan tend to be somewhat higher than those on adjustable rate loans because the lender has no way to reset the loan if rates in the general market rise significantly. To offset this risk, lenders charge a higher rate at the time of the loan as a form of protection.

Adjustable Rate Mortgages (ARMs) – As was mentioned above, an adjustable rate mortgage usually offers a lower initial interest rate because after the initial reset date, the lender has the ability to receive a higher rate if rates in the general market have risen. Lenders are in the business of profiting from lending capital at market rates, so the protection afforded by a rate linked to the general market is of value to the lender. The two dates of importance are the initial reset date and the subsequent reset dates; the longer the borrower has before the initial reset, the more protection he or she has from shifts in the market. Likewise, subsequent reset dates (usually every year thereafter) are important because they define how regularly the parties have interest rate exposure.

This type of mortgage is an attractive option to various borrowers, but should be of particular interest to individuals that foresee either a need or a desire to move quickly. While ARMs usually start at a lower rate, in rising markets they can end up with higher rates after several reset dates. If for example, an ARM starts 2% below the available fixed rate and rises at 1% per year, the break-even point will come 5 years after the loan is initiated. Under these circumstances, selling before the 5 years has elapsed makes the ARM less expensive. While there is no reason that an ARM must increase rapidly, but when figuring worst-case, this is an advisable practice. One must then make an honest assessment as to whether the property will be sold within the break-even period.

Interest-Only Loans – An interest-only loan is designed with two primary goals for the borrower: to minimize taxes and to minimize payments. Under this structure, the borrower is only responsible for making interest payment for some initial period. After this period ends, the principal repayment period begins, and the monthly payment amount often increases significantly. From the tax perspective, this structure front loads the interest paid – interest paid on one’s primary residence is completely tax deductable. These loans are far less common than they once were, taking much blame for the recent sub-prime debacle. Many critics have asserted that because of the significant jump in the monthly payment amount, many borrowers were allowed to undertake mortgages they could not afford. Compounding the problem is the fact that when the reset occurs, the borrower has not reduced the principal balance on the loan at all. If the loan goes to foreclosure, the amount to be repaid is usually very high. In an environment of falling prices, this intensifies the problem.

Flexible Payment Loans – Flexible payment loans are available only in very rare instances currently because the very premise of their genesis has evaporated. Under this type of loan, the borrower was left to exercise his or her discretion in making payments. Amounts ranging from full principal and interest payments all the way to skipped payments were allowed. The premise relied upon by the lender was that real estate prices could only rise. The property was therefore such high-quality collateral, that foreclosure was a nuisance but not an economic danger. As the prices of homes began to fall, lenders found that the collateral they had relied upon was not sufficient. Hence, these loans are increasingly rare.

Home Equity Lines and Loans – A home equity line of credit is called a revolver and, like a credit card, it may be drawn upon and paid down on a flexible schedule. A home equity loan, usually used for home improvement, is a lump-sum payment to the homeowner. Both are issued based on the value of the property involved. A home equity loan is sometimes used in conjunction with a traditional loan for higher-priced property. Rates charged on loans over $417.000 (referred to as jumbos) tend to carry higher rates. When a conforming loan is combined with a home equity loan, the blended rate is often more attractive than the higher jumbo rate.

USDA loans can help people with low incomes in rural parts of the state qualify for a subsidized low-interest loan.

Natural Disasters

Flood Insurance

Homeowner's insurance policies typically do not cover flooding. Most of the state of North Dakota is considered to have a very low flooding risk. Cass County, home of Fargo, is considered to have a moderate flooding risk. Ransom County, home of Lisbon, is considered to have a very high flooding risk.

Home buyers with mortgages in high-risk areas are required to buy flood insurance. Most flood insurance policies are sold by the United States federal government through The National Flood Insurance Program. Under-priced flood insurance in high-risk areas act as a subsidy to wealthy homeowners.

The NFIP does not charge nearly enough to cover the expected costs of its liabilities. The assessments are not sufficient to build any buffer to cover an extraordinary year, such as what occurred with Hurricane Katrina in 2005 or Hurricane Sandy in 2012. Because homeowners don€™t incur the full cost of building in a flood zone we end up with more houses there than if homeowners incurred the full cost of the flood risk, which exacerbates the government€™s costs in the next disaster.

Homeowners who live in lower risk areas & are not required to purchase flood insurance heavily cross-subsidize homeowners who are in areas where floods are more common.

Tornadoes

The eastern border of the state is considered to have a moderate tornado risk. A basic homeowners policy should cover financial damages from tornadoes.

Hail

Hail damage is common across the state. Damage from hail is typically covered by home insurance policies.

North Dakota Foreclosure Procedures and Regulations

North Dakota State Capitol Building in Bismarck.

  1. North Dakota is a lien mortgage state which means that lenders must use judicial foreclosure to move against the property of a defaulting borrower. This means that the process is judicial and requires the involvement of a court. The process begins when the lender files a complaint against the borrower. The process can be expensive and time consuming, which works in favor of the borrower because it gives him or her time to address the issues.
  2. The documents involved in the foreclosure procedure can take as long as 150 days to be processed. This is advantageous to the borrower because it may afford him time to find a way to either cure the default or to negotiate a settlement with the lender.
  3. In North Dakota, the right to redemption last for one year. This right gives the homeowner the right to redeem the loan buy purchasing the home from the buyer at the price paid. This is one of the many protections given to borrowers. While it may seem unfair to hold this right open for a year, it is rarely used. A homeowner who could not stay current on his or her mortgage is unlikely to come up with the full purchase price, even given an entire year. Furthermore, another lender is unlikely to help the defaulting homeowner exercise this right.
  4. North Dakota is a recourse state, meaning that the lender can go after the borrower for the full amount of the loan’s principal if the sale of the property does not cover the needed amount. This is referred to as a deficiency judgment. The only requirement that a lender is under to receive a deficiency judgment is to give notice in the original complaint of its intention to seek such a judgment if necessary.

Overall, the procedures designed by each state’s legislature are designed to both protect the rights of the parties involved, and to ensure the orderly functioning of the system.

 

Downtown Fargo, North Dakota During Winter Snow.