7 Best Mortgage Lenders for First Time Home Buyers in South Dakota • 2024 • Benzinga

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Jump straight to it: The best South Dakota mortgage lender for first time home buyers is Angel Oak Mortgage Solutions.

Are you looking to buy your very first house in South Dakota? This state is a wonderful place to hang your hat, but you probably have a lot of questions about the home buying process. For instance, how do you find the best mortgage lender?

We’ve created this quick first time buyer’s guide to walk you through the mortgage process in South Dakota.

Best Mortgage Lenders for First Time Home Buyers in SD

7 Best Mortgage Lenders in South Dakota for First Time Home Buyers

We’ve compiled the top lenders in the state of South Dakota and broken them into categories to help.

1. Best Overall: Angel Oaks Mortgage Solutions

Angel Oak Mortgage Solutions is a full-service mortgage lender offering traditional and portfolio Non-QM mortgage loans. The mortgage company is licensed in 45 states and offers competitive rates and quick closing times. 

Angel Oak Mortgage Solutions offers a wide range of mortgage solutions for various needs. Whether you are looking to purchase a home, cash-out on your current property, or refinance at a different rate, they have options for you.

With loan amounts available up to $3.5 million, they can support you in financing properties of different values. They cater to primary residences, second homes, and investment properties, and accommodate various types of properties such as single-family homes, townhomes, and condos.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 30

  • Condo loans available
  • Cash out options available
  • Rate-term refinance options available
  • Loans available up to $3.5 million
  • Bank statement loans are available
  • You cannot obtain loans for non-warrantable condos

2. Best for Online Applications: Rocket Mortgage®

Powered by Quicken Loans®, Rocket Mortgage® is quickly becoming one of the top mortgage solutions throughout South Dakota. Its online application takes just minutes to complete, after which you’ll see your approval status and mortgage options. If you have questions, Rocket Mortgage® has 24/7 customer service associates ready to help.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 30

  • Online applications
  • Several loan options
  • Service from a top lender
  • Relatively high minimum credit score
  • No HELOCs
  • No other home equity loan options

3. Best for Self-Employed Individuals: CrossCountry Mortgage

  • securely through CrossCountry Mortgage’s website

    securely through CrossCountry Mortgage’s website

    Best For:

    Self-employed Borrowers

    Available in: CA, CO, CT, DC, FL, GA, IL, MD, MA, MI, NH, NJ, NY, NC, OH, PA, RI, SC, TN, TX, VA, WA 

CrossCountry Mortgage makes it easy for all types of home buyers to get approved for a mortgage. Their flexible requirements can help you get financing, with no employment or income verification and no minimum DTI. Luxury Mortgage offers traditional loan terms, as well as more flexible home payment plans with their 40-year loan program.

It’s also easier to get approved if you’re self-employed. Tax returns are not required and you’ll only need one year of self-employment income history and a minimum credit score of 580. Luxury Mortgage can also help you get approved on assets alone, like your bank statements, stocks and bonds, or retirement accounts.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 21

  • Long-term loan programs
  • Low minimum credit score
  • No minimum DTI
  • Relatively high minimum credit score
  • No HELOCs
  • No other home equity loan options

4. Best for In-Person Experience: First Dakota National Bank

If you’d rather let an experienced mortgage professional walk you through the application process and review your options with you, consider financing with First Dakota National Bank. This bank offers an in-person experience throughout South Dakota and can offer the guidance you need to find the best mortgage for your financial situation.

Loan types offered: Conventional, FHA, USDA and VA

Credit score requirement: 620

Average days to close a loan: 21

  • Competitive interest rates
  •  Personalized customer service
  • Transparent fees and terms
  • Online account management

5. Best for Credit Monitoring: loanDepot

loanDepot is a non-bank lender that gives you convenience and efficiency online with the option to visit one or over 200 branches across the country. loanDepot offers fixed-rate and adjustable-rate conventional mortgages. You could also secure jumbo, FHA or VA loans, although conventional loans made up most of LoanDepot’s mortgage originations last year. LoanDepot also offers 10-, 15-, 20- and 30-year mortgage terms. 

In addition to mortgages and home refinancing, LoanDepot offers free credit score monitoring to help you prepare to apply for a mortgage. You’ll need a minimum credit score of 620 and at least 5% downpayment. 

Loan types offered: Conventional, FHA, VA, USDA and Jumbo

Credit score requirement: 620

Average days to close a loan: 30 days

  • Choose shorter repayment terms 
  • $1,000 Close-on-Time Guarantee
  • Possible home security, moving and smart home product discounts 
  • Use its online loan calculator to compare monthly payments and lifetime interest before deciding on a mortgage lender
  • No mortgage rates listed online
  • No USDA loans

6. Best for Lender Comparison: Credible Mortgage

Unlike individual mortgage lenders, Credible is a lender marketplace that allows you to compare multiple lenders. You’ll enter basic financial information and get quotes from several lenders on standard home mortgage products. Credible offers a free, fully online mortgage broker service that lets you get quotes from online lenders.

You can find conventional, FHA, VA, Jumbo and refinance mortgage offers. You’ll usually need a credit score in the mid-600s, but it varies by lender. It offers straightforward, convenient service with the possibility of finding the lowest interest rates.

  • Free option to compare lenders
  • Inputting information won’t affect your credit score
  • Get excellent customer support
  • Not available in Missouri, New York or Rhode Island
  • You’ll have to enter your info to get interest rate quotes
  • Origination fees may be higher than the average
  • No live chat feature for customer support

7. Best for VA Loans: Veterans United

If you’ve logged some time in the military, Veterans United’s loans will likely be the best deal. Unlike other veteran-marketed loan programs, Veterans United only accepts active duty and veteran military members.

In addition to no-down-payment loans, you’ll also eliminate the private mortgage insurance you’ll have to pay with other mortgages.

Veterans United is also more forgiving of lower credit scores. Interest rates are lower than average.

Loan types offered: VA, USDA, FHA and Jumbo

Minimum credit score: 620

Average days to close a loan: 30

  • Streamlined loan application process
  • Competitive interest rates and loan terms
  • Excellent customer service
  • Funding fees
  • Limited physical locations

The Housing Market in South Dakota: An Overview

The first thing you should do when preparing to buy a home is familiarizing yourself with your state’s — and area’s — market and average home prices. 

Here’s a quick look at the median home values of top cities in South Dakota:

Total households: 351,182

Median list price: $290,043

3 most expensive cities in South Dakota to buy a house:

  • Colonial Pine Hills: $548,348
  •  Keystone: $471,610
  • Renner: $433,247

3 most affordable cities in South Dakota to buy a house:

  •  Aberdeen: $218,950 
  • Brookings: $265,000 
  • Rapid City: $300,000 

Now that you have a good idea of what you can expect to pay for your first home, we’ll get you ready for the mortgage process.

Preparing for a Mortgage

Next, we’ll walk you through the mortgage process to make sure you have all the resources and documentation you’ll need at your disposal.

First Time Home Buyer Mortgage Process in South Dakota

The current state of your finances plays a large role in determining the type of mortgage you apply for. Before applying, here’s what you should know:

  • Your current credit score: Lenders look at your credit score to determine your spending and payment habits. All mortgage lenders have different credit score requirements, so be sure to know where you stand before applying.
  • Your down payment amount: Knowing how much of a down payment you can afford will help you search for the right type of mortgage. Different lenders and mortgage types have different requirements, so figure out the amount you can put down on a home before opting for a specific lender or mortgage type.

What You’ll Need

Once you’ve figured out the math, it’s time to gather some key documents you’ll need when applying for your mortgage. Having them ready to go can speed up the application process.

Be ready to provide your:

  • Social Security number
  • Tax information (from the past 2 years)
  • Pay stubs (from the past 2 months)
  • Banking account totals (checking, savings, retirement and other investment accounts)

Additional documentation may be required depending on your lender.

Next, you can use the below list of popular lenders in South Dakota to determine if you meet their minimum credit score requirements.

Mortgage Options

As a first time home buyer, you should know the different types of home loans available. They all have different requirements and benefits, so we’ll walk you through the 5 most popular options below. 

Conventional Loan

This home loan is funded through traditional means, by banks or credit unions. A conventional loan typically has a higher interest rate since it is not backed by the federal government. They also often have low down payment and application requirements, making them easier to get approved for.

FHA Loan

This home loan is funded through the Federal Housing Administration (FHA) for first time home buyers. An FHA loan typically has a lower than market interest rate, low credit score requirement (580) and low down payment minimum (3.5%). FHA loans can be secured through many conventional mortgage lenders.

USDA Loan

This home loan is funded through the U.S. Department of Agriculture (USDA) for homes bought in rural areas of the U.S. A USDA loan typically has a lower-than-market interest rate, low credit score requirement (640) and usually no down payment requirement. USDA loans can be secured through many conventional mortgage lenders.

VA Loan

This home loan is funded through the U.S. Department of Veterans Affairs and is designed to help former and current military personnel and their families finance a home. A VA loan typically has a lower-than-market interest rate, no set credit score requirement and no down payment requirement. VA loans can be secured through many conventional mortgage lenders and VA-only lenders. 

Jumbo Loan

This home loan can be either an FHA or conventional loan and is used to purchase homes of high values (typically over $484,350, depending on your location). A jumbo loan typically has higher down payment expectations and stricter credit score requirements. Expect to pay a 20% down payment for most lenders, though online lenders like Rocket Mortgage® only require 10% down.

First Time Home Buyer Programs in South Dakota

The South Dakota Housing Development Authority (SDHDA) offers a handful of programs designed to help first time home buyers like you better afford a home. Here are the top programs you should consider:

SDHDA Mortgage Program

This first time home buyer’s mortgage program helps you afford a low-rate mortgage. To qualify, you’ll need to meet the SDHDA income requirements, make sure the home you’re purchasing is under $275,000 and confirm that the home will be your new primary residence.

SDHDA Down Payment Assistance:

If you need help with closing costs or your down payment, look into the SDHDA down payment assistance program. This program provides up to 3% in the form of a second mortgage to qualifying buyers. This loan is interest-fee and due when the home is resold or when the first mortgage is paid off.

Governor’s House Program

Though not exclusive to first time home buyers, this program helps lower-income residents better afford a home. If you meet income requirements, this program will actually build you a qualifying home for a reasonable rate (starting at $48,700 for a 2-bedroom home). You can learn more about this unique program at the SDHDA website.

Current Mortgage Rates in South Dakota

Your mortgage rate is the interest rate you’ll pay on your loan, throughout the duration of your mortgage. Securing a lower rate could end up saving you tens of thousands in interest payments. 

Your individual mortgage rate is determined by your lender based on your credit score, down payment, home location, type of mortgage and mortgage term.

Your mortgage term is the length of your loan. There are 2 primary types of mortgage terms: fixed and adjustable. A fixed mortgage lets you pay the same amount each month for the duration of your loan. An adjustable mortgage (ARM) lets you pay a set amount for your introductory period. After this period, your rate will change based on the market and your monthly payment amounts will fluctuate.

Mortgage rates can vary greatly from city to city. To help, we’ve compiled median mortgage rate information for South Dakota, to give you a better idea of what you can expect your rate to be.

Loan Type Rate APR
30-year fixed N/A N/A
15-year fixed N/A N/A
7/1 ARM (adjustable rate) N/A N/A
5/1 ARM (adjustable rate) N/A N/A

Rates based on an average home price of $205,567 and a down payment of 20%.

Closing a Mortgage

Now that you understand the different types and terms of mortgages, you should understand how to closing process works. Closing is the final step in the mortgage process.

Closing will begin with a final walkthrough of your new home to determine it’s in the same condition as documented in your paperwork. From there, you’ll sign all remaining paperwork, pay any funds you owe (down payments and closing costs) and get the keys to your new home.

The time it takes to move through the closing process varies by lender but is typically between 30 and 45 days. Online lenders, like Rocket Mortgage®, can help you navigate through this process much faster.

Here are average closing timelines based on the top mortgage lenders in South Dakota.

Get Ready to Buy Your First Home in South Dakota

We know that buying a home is a huge decision that will impact your life for years to come. Be sure to take the time you need to thoroughly research your mortgage options and decide what mortgage benefits are most important to you. Then, partner with a lender who has your financial well-being in mind.

Frequently Asked Questions

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To get pre-approved for a mortgage in South Dakota, first, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!

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Mortgage interest that you’ll pay in South Dakota is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.

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Most lenders in South Dakota will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.

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