Everything You Need to Know About Buying a House in Mississippi

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It’s no wonder why some are looking to Mississippi to buy their next home. The state’s been home to blues music legends, like B.B. King, and today’s residents enjoy low costs of living, a rich variety of outdoor landscapes, and all kinds of options when it comes to great comfort food. 
However, the process of buying a home can get disorienting pretty quickly, especially if it’s your first time doing so.
That’s why insurance broker and comparison app Jerry is here to break down what you should know about buying a house in Mississippi. We’ll take a look at the various steps of the home buying process, from down payments to finding the right mortgage and more.
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Figure out your finances

The first and most obvious step when it comes to buying a house in Mississippi is to figure out where your finances stand and what you can afford. You’ll need to get a sense of what your credit score and debt-to-income (DTI) ratio look like, as well as what payments and fees to expect when you finally find the right home.
Before you get to house-hunting, here’s a look at the financials involved when buying a house in Mississippi.

Check your credit score

Your credit score is a crucial part of the home buying process because it’s usually key to qualifying for a mortgage if you plan on using one to purchase your home. Your credit score demonstrates to your potential lender what kind of history you have when it comes to taking on debt and making on-time payments. 
Typically, it’s ideal to have a credit score of 620 or higher.
There are mortgage options for lower credit scores if yours isn’t quite there, though. 
Federal Housing Administration (FHA) mortgage options accept credit scores as low as 523. A Veterans Administration (VA) accepts scores as low as 500, but you have to be a veteran, active service member, or eligible spouse to qualify. Private mortgage options for lower credit scores are available, too, but they might come with more fees or higher interest, so read their fine print carefully.
If you have a low credit score, you also have the option of waiting to purchase a home and working to build up your credit in the meantime. With a higher credit score, you’re typically in a better position to find a mortgage with a better interest rate and better terms.

Calculate your debt-to-income (DTI) ratio

Perhaps just as important as your credit score is your debt-to-income (DTI) ratio. Your DTI is basically what it sounds like: a ratio of your debt payments to your gross income.
To find out your DTI, add up your monthly payments that go toward debt, then divide that total by your monthly income before taxes.
These are some debt payments that go toward DTI:
  • Rent or mortgage payments
  • Student loan payments
  • Car payments
  • Credit card payments
  • Child support
  • Alimony
It’s typically recommended to strive for a DTI that’s under 36% (including your mortgage payment). The lower your DTI, the more you can use your own money to fund other areas of your life.
If your DTI is more than 50%, it’s likely going to be difficult to afford a home in Mississippi, let alone qualify for a mortgage.
Pro-tip Remember that DTI doesn’t account for all your living expenses, like groceries, gym memberships, or prescriptions. Just because you qualify for a certain mortgage amount with your DTI doesn’t necessarily mean you can afford it!

Determine your down payment 

If your credit score and DTI are in good shape, it’s time to think about what kind of down payment you can afford. How much you’ll need for a down payment depends on what kind of mortgage you’ll be using.
A conventional mortgage will typically require that you make a minimum down payment of 20%. For a $200,000 home, that means you’d have to make a down payment of at least $40,000.
Depending on the purchase price of your home, this isn’t always an easy option, especially if you’re a first-time homebuyer.
If that’s the case, there are other mortgage options out there with lower down payment requirements. They include:
  • Private mortgages: Certain mortgages from private lenders will have lower down payment options, like 5% or 10%. However, keep in mind that these will often come with private mortgage insurance (PMI) requirements, which can increase the cost of your monthly mortgage payment.
  • FHA loan: Down payments can be as low as 3.5%, depending on your credit score.
  • VA home loan: If you qualify, you might not be required to make a down payment at all. VA mortgages also offer lower interest rates and closing costs.

Prepare for closing costs and other fees

An often-overlooked aspect of buying a home is the closing costs. In some cases, closing costs could make or break your ability to buy a home.
While what closing costs involve varies widely, it’s common for them to land between 2% and 5% of a home’s purchase price. Sometimes, you can negotiate for the seller to cover all or some of the closing costs.
Here are some of the costs and fees that closing costs can involve:
  • Inspection fees
  • Appraisal fees
  • Loan application fees
  • Mortgage insurance
  • Property taxes
  • Home insurance
The average home value in Mississippi is about $157,000, according to Zillow’s Home Value Index. A home that sold at this price could potentially cost you $3,140 to $7,850 at closing.
Property taxes are relatively low in Mississippi, averaging about 0.79%, although rates will vary from county to county. On the lower end, Tunica County has a rate of about 0.45%. Yazoo County’s rate is 0.92% and Sunflower County’s rate is 1.22%, but median home values are relatively low in these areas. In Madison County, property taxes are about 0.73%, but its home values are some of the highest in the state, so residents here typically pay more total in property taxes every year.

Look for homeowners insurance

Homeowners insurance will likely be part of your costs at closing, and it’ll be a recurring cost long after. In the United States, the average cost of homeowners insurance is about $1,387 per year.
As you shop around for homeowners insurance, it’s a good idea to seek out multiple quotes to increase your odds of getting the best coverage level at the best rate. You can also save money by bundling with your other insurance, like car insurance.
The insurance broker and comparison app Jerry can make the process easy for you by gathering quotes from up to 50 top insurance providers!
Key Takeaway Before buying a house in Mississippi, it’s essential to figure out what you can afford. To get a better understanding of where your finances stand, take a look at your credit score and DTI, and think about how much you’d be able to pay toward a down payment and closing costs.

Get preapproved for a mortgage

Before you get out and start house hunting, it’s a good idea to get preapproved for a mortgage. This will involve your potential lender looking at your credit score, DTI, and various aspects of your financial situation and employment history.
Some realtors and sellers might require you to have a mortgage preapproval before showing you properties, especially in high-demand real estate areas. Being preapproved for a mortgage can also help sellers take your offers more seriously and potentially give you more negotiating power.
One important thing to note here is that getting preapproved for a mortgage will require a hard credit check, which can weigh down your score for a while, potentially making it more difficult to get approved for a mortgage later on. So, make sure you’re ready to buy a house before getting to this step.
Once you’re ready to start the preapproval process, it’s often recommended to seek out more than one mortgage preapproval—about three is a common recommendation—since multiple applications within a certain time frame don’t have an additional effect on your credit score. It can also be helpful because you can compare their terms, fees, and interest rates, increasing your odds of finding the best deal and saving money in the process.

How to pick the right mortgage in Mississippi

There are all kinds of mortgage options for all kinds of borrowers. One of the main things you’ll want to consider is your mortgage’s interest rate, which has a big impact on what your monthly payment will look like.
The term of your mortgage also has a considerable impact on your financial future. Mortgage terms, especially with conventional loans, are most commonly 15 years or 30 years. With a 15-year mortgage, you’ll see higher monthly payments, but you’ll pay less interest over the life of the loan. You can often get a reduced interest rate, too. For a 30-year mortgage, it’s the opposite: you’ll have a lower monthly payment, but you’ll end up paying more in interest over time—often tens of thousands of dollars more.
If you’re looking for more flexibility with your monthly payments, another option is that you could opt for a 30-year mortgage, but make payments as if it were a 15-year term whenever you’re able. That way, there’s not as much pressure to figure out your mortgage payment if you encounter a period when you’re more strapped for cash.
Pay attention to any fees associated with your potential mortgage, too, as sometimes these can add up in unexpected ways that might affect your ability to afford the house you want.

Look for a house

You’ve evaluated your finances and you’ve been preapproved for the right mortgage option. Now, it’s time to begin house hunting!

Pick your city or neighborhood 

When it comes to picking the city that’s right for your lifestyle, it can help to make a list of what you’re looking for in a community and seek out cities that align with that profile. 
Consider factors like things to do, cost of living, and climate. Are you looking for a vibrant art and culture scene? Good community schools? Something else? 
Some of Mississippi's most highly sought-after cities include Oxford, Cleveland, Bay St. Louis, Pass Christian, Hattiesburg, and Columbus.
Once you have one or several cities in mind, zone in on particular neighborhoods to see what sets them apart and how their home values differ. 

Buyer’s market vs. seller’s market

Before making an offer on a home, it’s helpful to know whether you’re in a buyer’s market or a seller’s market, as this will affect how much influence you have when negotiating a home purchase with a seller.
  • If you’re in a buyer’s market, there are more homes for sale than there is demand, which can give a buyer more negotiating power.
  • If you’re in a seller’s market, more people are looking for homes than there are available homes for sale. In a seller’s market, a seller will usually have more negotiating power.
To get a sense of what kind of market your desired community is in, keep tabs on recently sold homes. Take a look at what the asking price was, what it sold for, and how long it stayed on the market. In a buyer’s market, homes will often sell for below their asking prices and sit on the market for a while. In a seller’s market, houses will sell quickly—and often above their initial asking prices. Competitive bidding wars among multiple offers can also be common in a seller’s market.
Like much of the United States at the moment, many communities in Mississippi are in seller’s markets. According to Zillow’s Home Value Index, the average value of a home in Mississippi is about $157,000, and average home values in the state have risen 14.1% from December 2020 to January 2022.
Markets are always subject to change, however, so that’s not to say that a seller’s market will stick around forever.
Pro-tip In a seller’s market, if you find a home that feels like the right fit, it’s a good idea not to wait too long to put in an offer, as homes can sell quickly. That said, don’t succumb to pressure and feel like you have to pay more than you feel a house is worth, either.

Find a real estate agent

Buying a home can be a complicated process, especially if you’re not familiar with your desired location yet. That’s where the help of a real estate agent can come in
An experienced real estate agent who knows their community can help you find the kinds of homes you’re looking for more quickly than if you were looking alone, and they can help you put together stronger offers for a seller, as well as point out any potential red flags about a home you might have missed.
When looking for a real estate agent, you’ll want someone who has extensive experience in the area where you’re house hunting. A good real estate agent will have good references, referrals, customer reviews, and they’ll be honest about what they think of a home or neighborhood—even if the answer isn’t conducive to them making a sale.

Make an offer

If you’ve found a home in your price range that feels just right, you might want to make an offer!
If you’re working with a real estate agent, they can help you put together a strong offer for the seller and all the associated paperwork.
The seller can accept or come back with a counteroffer. Once you agree, you can proceed onward to closing on the house, and in a matter of time, you’ll finally be a homeowner! 

How to save on homeowners insurance

As if finding your dream home wasn’t difficult enough! The search for the right insurance policy to protect your new home can feel just as tedious. If you’re looking for a way to make the insurance shopping process easier, you’re in luck, because Jerry can help you do just that! 
Jerry can help you find and compare quotes from top home and auto insurance providers, and they can even help you bundle policies for additional savings. Getting started takes less than a minute, and the average Jerry user saves $887 per year on car insurance!
Jerry was wonderful! I used it for my auto and renters policies. I trusted it so much that I signed up my homeowners insurance under Jerry as well. All of the agents are amazingly nice and knowledgeable.” —Mary Y.

FAQs

How much money you’ll need to buy a house in Mississippi depends on several factors, like what city you’d like to live in, how much you can put toward a down payment, and what you can afford for a monthly mortgage payment.
If you were to purchase a home for $150,000 and wanted to make a 20% down payment, you’d want to have at least $30,000 saved, plus funds for closing costs and other fees. 
You’ll also want to have emergency savings in place to cover your living expenses or any unexpected repairs that may be needed after you move in.
Generally, it’s ideal to have a credit score of at least 620 to qualify for a mortgage in Mississippi. That said, if your score doesn’t quite reach that mark, there are still other mortgage options out there that consider lower credit scores, like FHA loans, VA loans, and certain private mortgages. 
Whatever mortgage option you pick, just be sure to read the terms carefully.
The best place to buy a house in Mississippi depends on what you’re looking for in a community. Some of Mississippi’s more expensive real estate markets include Oxford, Hattiesburg, Bay St. Louis, and Pass Christian. Cities with home costs on the lower end include Pearl, Aberdeen, Clarksdale, and Byram.

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