8 Steps to Buying a House in Missouri

Clever Real Estate

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Clever Real Estate

September 16th, 2022
Updated September 16th, 2022

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8 Steps to Buying a House in Missouri

Save for down payment | Find a real estate agent | Get preapproved for a mortgage | Choose your neighborhood | Go house hunting | Make an offer | Inspections and appraisal | Final walkthrough and closing

Buying a house in Missouri is an exciting milestone, but the process can take some time. Several factors, like your financial situation, market conditions, and the local economy can affect both how long it takes you to find a home and how much it costs you.

For example, homes in Columbia are hitting the market at $354,950 and selling within 36 days — 22 days faster than the state average! — so you'll need to move quickly if you want to beat out the competition.

The more you know about the home buying process and Missouri's current real estate trends, the more prepared you'll be to navigate this complicated process as quickly and smoothly as possible.

No matter where you are in your home buying journey, Clever can connect you with local real estate pros who will help you purchase your Missouri dream home!

The best part? Clever's service is 100% free! You can meet local lenders and real estate agents with no obligation. If you don't find the perfect match, you can walk away at any time.

» START: Find top local agents today!

Step 1: Save for a down payment

🔑 Key takeaway:

Your down payment can be less than 20% of the purchase price — $46,355 for the typical home in Missouri — but you'll have to purchase mortgage insurance and pay more interest over the life of your loan.

Your down payment is the first part of your home's purchase price that you pay at closing. Your mortgage lender will pay the remaining balance.

Typically, mortgage lenders in Missouri want you to contribute 20% of the purchase price as a down payment. That would be $46,355 for a $231,773 home — the typical home value in Missouri.

However, you have options to lower your down payment amount.

Government backed loans, like VA and FHA loans, allow you to contribute 0% and 3.5% of your home's purchase price respectively. Even conventional loans allow for down payments as low as 3-5% (though the minimum varies by lender).

Mortgage type
Minimum down payment (%)
Down payment ($)
VA Loan
0%
$0
FHA Loan
3.5%
$8,112
Conventional
3%
$6,953
Based on typical home values from Zillow (August 2022)

But making a down payment of less than 20% comes with some risks.

First, because you're borrowing more money, you'll have a higher monthly payment and pay more in interest over the life of your loan.

Down payment
Monthly payment
Total interest
Total Cost
5%
$1,263
$234,367
$466,140
20%
$1,063
$197,362
$429,135
Based on home values from Zillow (August 2022) and a 5.59% interest rate for a 30-year loan.

Second, you may have to purchase mortgage insurance.

Conventional loans require private mortgage insurance (PMI) until your loan balance reaches 80% of the purchase price. FHA loans, on the other hand, require a mortgage insurance premium (MIP) for the life of your loans.

Mortgage insurance costs around 1% of your mortgage balance annually. However, rates vary based on your down payment and credit score. Typically, your mortgage insurance payment is added to your mortgage payment each month.

VA loans don't charge mortgage insurance. Instead, you'll pay a VA loan funding fee at closing, which can range from 1.4% to 3.6% of the purchase price.

» READ MORE: Everything you need to know about low-income home loans

Missouri down payment assistance programs

Missouri offers numerous down payment assistance (DPA) programs that can help first-time and low-income buyers afford a house. Eligible participants may be able to receive a government grant or a second mortgage with deferred or forgiven payments.

Check out the following DPA resources to see which ones you qualify for:

MHDC First Place Loan

The Missouri Housing Development Commission (MHDC) offers cash assistance for first-time homebuyers participating in the First Place Loan program.

Financial aid comes as a second mortgage of up to 4% of the first mortgage. The loan is forgiven after 10 years if you don’t move, refinance, or pay off your first mortgage during that time.

Eligible buyers must meet the income and home purchase limits for their county.

MHDC Next Step Program

MHDC's Next Step Program offers cash assistance for both first-time and repeat homebuyers. The financial aid is available as a second mortgage loan of up to 4% of the first mortgage. After 10 years, the loan will be forgiven if you don't resell, refinance, or pay off your first mortgage.

Purchase and income limits apply, but they vary by county.

U.S. Department of Housing and Urban Development

Missouri's HUD page provides a list of additional DPA programs here.

Step 2: Find a great real estate agent in Missouri

🔑 Key takeaway:

Interview multiple agents to find one who knows your target neighborhoods, has experience in your price range, and communicates well.

Your real estate agent will be your main ally during the home buying process. Besides finding and showing you properties, your agent will help you make offers, negotiate contracts, and navigate the closing process. Plus, they can recommend other service providers like title companies and inspectors to help you buy your home in Missouri.

Don't rush into choosing an agent. Instead, take the time to research and interview multiple real estate agents who have experience in the neighborhoods you're interested in. You should pay attention to a realtor's:

  • Years of experience
  • Number of transactions in the last year (the more the better!)
  • Experience in your price range
  • Overall review score
  • Individual reviews and complaints

Top Local Agents Hand-Picked for You!

Clever matches you with multiple agents in your area so you can interview, compare, and choose the best one to help you buy your next home.

Step 3: Get preapproved for a mortgage

🔑 Key takeaway:

Once you're preapproved for a mortgage, it's imperative that your financial situation doesn't change. If your credit drops, it can derail the process and keep you from closing on your house.

Here are some easy ways to ensure your credit doesn't change after you receive your preapproval letter:

  • Avoid opening new credit accounts
  • Don't close any accounts that have been open for a long time
  • Make all of your credit card payments on time

» LEARN MORE: What factors do mortgage lenders consider?

A mortgage preapproval letter is an offer to lend you up to a certain amount of money to purchase a home. It shows sellers that you are a serious buyer who is financially qualified to make an offer on a home.

Most sellers in Missouri will require preapproval before showing you their home.

You don't have to decide on one lender right now. In fact, you should compare interest rates and preapproval amounts from several lenders to make sure you're getting the absolute best terms when you buy your Missouri home.

Get Pre-approved Today!

Get matched with a lender who can tell you how much house you can afford. To get started, where do you plan on buying?

Step 4: Choose the right location

🔑 Key takeaway:

Search for neighborhoods where:

  • Home prices are within your price range
  • Home values are on the rise
  • The local amenities support your lifestyle

Currently, the typical home value in Missouri is $231,773, but don't worry if that doesn't perfectly match your budget. Home prices vary dramatically from city to city and even from neighborhood to neighborhood!

Also, look at past home value trends. This will give you an idea of how much your home's value could go up over the next few years.

To give you an idea of how appreciation could impact what your house is worth in the future, consider these examples from three neighborhoods in Saint Louis:

Home value appreciation in Saint Louis

Neighborhood
2015
Current
Appreciation
Dutchtown
$59,340
$124,591
52.4%
Central West End
$272,124
$400,998
32.1%
Tower Grove South
$121,199
$228,438
46.9%

Step 5: Start house hunting in Missouri

🔑 Key takeaway:

The increasing inventory in Missouri will leave you with a lot of options, so there’s a decent chance of finding a house that checks most, if not all of your boxes. However, with prices on the rise, you may either have to either lower your expectations or be more flexible with your budget when house hunting. Get your realtor’s input and be open to their suggestions — they may even surprise you with a listing that you didn’t know you’d love.

Searching for homes in Missouri is the fun part of the home buying process! You'll get to look at a variety of homes and discover what you really want in a home.

Make a list of everything you want in a home and prioritize them. At the top of the list should be the items that are most important to you. This will help you separate your "must-haves" from your "nice-to-haves."

Your agent can help you understand if your wants are realistic for your budget and favorite neighborhoods or if you need to rethink what you're looking for.

Look at current housing inventory

The timing of your house hunt in Missouri can have a big impact on your number of options. For example, in Missouri, June has historically seen the most homes for sale. Searching in this season could give you more options and a greater likelihood of finding your dream home.

On the other hand, December gives you the fewest choices in Missouri. Historically, there are 49.0% fewer homes for sale than during Missouri's peak season.

Housing inventory in Missouri by season

Season
New listings per month
Spring
9,742
Summer
10,021
Fall
8,345
Winter
6,366
Based on data from Realtor.com (August 2022)

Step 6: Make an offer

🔑 Key takeaway:

Missouri’s market is very active with few listings left at the end of each month, so expect some fierce competition when putting in an offer on a home you like. Talk with your agent and work out all of your options for contingencies and concessions ahead of time. That way, you can come up with a competitive offer right off the bat while still ensuring that the deal is fair to you.

Once you find a Missouri house you love, it's time to make an offer. Your real estate agent will help you write a compelling offer that gives you the best shot of convincing the homeowner to sell to you.

Currently, in Missouri, homes stay on the market for 70 days before going under contract. However, every market goes through seasonal changes. During busier months, homes get snatched up more quickly than others.

Historically, Missouri homes sell fastest in August, where the average property is only on the market for 59 days. If your home search falls around this time, you should be prepared to move quickly and potentially make offers on several homes before yours is accepted.

On the other hand, if you buy in February, you have a bit more time to search. Homes typically stay on the market 22 days longer than Missouri's annual average.

Average time homes spend on market in Missouri

Annual average
70 days
January
88 days
February
87 days
March
67 days
April
57 days
May
56 days
June
56 days
July
59 days
August
60 days
September
65 days
October
67 days
November
70 days
December
79 days
Based on data from Realtor.com (August 2022)

» LEARN MORE: What should an offer include?

👋 Next Steps: Talk to an expert!

If you're weighing your options for buying or selling a house, Clever can help!

Our fully-licensed concierge team is standing by to answer questions and provide free, objective advice on getting the best outcome with your sale or purchase.

Ready to get started?

Give us a call at 1-833-2-CLEVER or enter your info below. Our concierge team will be in touch shortly to help.

Remember, this service is 100% free and there’s never any obligation.

Step 7: Inspections and appraisals

Inspections and appraisals are an opportunity for you to better evaluate the home's condition and value before officially purchasing it. You may have an opportunity after this step to renegotiate the terms of your contract with the seller if something unexpected pops up.

🔑 Key takeaway:

  • Inspections: A licensed professional checks the house for any unseen, unexpected, or potential issues.
  • Appraisals: An appraiser hired by your lender examines the house to determine how much it's worth.

Home inspections in Missouri

Having your Missouri home inspected by a licensed inspector gives you peace of mind about the condition of the property before you commit thousands of dollars to purchase it.

Your inspector should check out the following parts of the property:

  • Roof
  • Foundation
  • Electrical system
  • HVAC system
  • Plumbing

If the home has a septic system, you should also pay for a septic inspection to make sure it doesn't have any problems that wouldn't be covered in a typical home inspection.

Missouri-specific inspections

Some Missouri sellers may include a "caveat emptor" clause in their purchasing agreement, which means that they don't have to disclose all known issues with a property to interested buyers. As a "buyer beware" state, it's important to take extra precautions to ensure that a Missouri property doesn't have hidden damages or health hazards.

In addition to getting a general home inspection, it's strongly recommended to complete the following tests before closing on a home:

  • Radon testing: Many areas in Missouri have elevated levels of radon, so it's a good idea to conduct a test annually. You can get a free radon test kit from Missouri’s Department of Health here.
  • Termite inspection: Some lenders require pest inspections, but it's a good idea to get one done regardless. Catching a potential infestation before you move in will help you avoid expensive repairs and treatments later.

Appraisals

Appraisals determine the value of the property. If you're using a mortgage to buy your new home, your lender will order an appraisal to make sure the home is worth the money that it's loaning you.

» LEARN: 3 options for buyers after a low appraisal

Step 8: Close on your new home!

🔑 Key takeaway:

Before you close on your new home, you and your agent will do a final walkthrough of the property to ensure that it's still in the expected condition.

On the closing date, you'll meet at the title company to complete the title transfer of your Missouri home. Expect to spend a few hours reviewing legal documentation and settling your closing costs.

There will be several important documents for you to read and sign in order to finalize the purchase. Take your time and ask your escrow agent for clarification if you don't understand something.

A few essential documents to look out for will include:

  • Your final loan application
  • The deed
  • The mortgage promissory note
  • The disclosure statements

After the paperwork is finished, you’ll need to pay your closing costs. The title company will collect the total amount you owe to all your service providers, and then they'll distribute the funds to each party on your behalf.

As a homebuyer, you should be able to divide your closing costs into four categories:

  • Lender fees: Fees paid to your mortgage lender for originating and underwriting your loan. These fees can also cover other costs related to your loan, such as appraisal fees and survey fees.
  • Title and escrow charges: Fees paid to your title company for research and documentation. These charges can also cover the costs of the title search, title insurance, and facilitating the closing.
  • Prepaid costs: Ongoing costs of homeownership, such as property taxes and homeowners insurance. Lenders sometimes require new homeowners to pay for these predictable expenses up front.
  • Other closing costs: Miscellaneous expenses that vary from buyer to buyer. These expenses may cover natural disaster certification fees or real estate attorney fees.

Buyers in Missouri typically pay 3–5% of the purchase price in closing costs. For a $231,800 home — the typical home value in Missouri — that's between $6,954 and $11,590!

» LEARN MORE: Closing costs for buyers in Missouri

Should you hire a real estate attorney?

In Missouri it's required for a real estate attorney to be part of every home sale. While your agent can make recommendations, remember you get to make the final decision. Interview lawyers before hiring them to make sure they have the experience you need.


Frequently asked questions

  1. Save for down payment
  2. Get pre-approved for a mortgage
  3. Choose your preferred Missouri neighborhoods
  4. Partner with the right real estate agent in Missouri
  5. Go house hunting
  6. Make a strong offer
  7. Inspections and appraisals
  8. Do a final walkthrough and close

Yes! The Missouri Housing Development Commission offers its First Place Loan Program to first-time buyers and veterans. Eligible buyers can receive a competitive, fixed-rate loan with an option for down payment assistance. If you choose not to get down payment assistance, you'll receive a lower interest rate on your loan.

To qualify, you must not exceed the household income limit set for your county. Purchase price limits also apply, but they vary according to what type of property you're buying.

» READ: What are the top first-time homebuyer programs?

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