Rhode Island Mortgage - What to Expect When Buying a Home in Rhode Island

Posted by Nick Niesen on October 29th, 2010

Maybe you?re buying your first home in Rhode Island, or perhaps you?re relocating to Rhode Island from another state. Either way, it?s important that you educate yourself on Rhode Island home loans before shopping for a home and mortgage. This article explains what you?ll need to know before buying a home in Rhode Island:

The median price of a home in Rhode Island is $133,400. Recently, homes in Rhode Island have been appreciating at rates above the national average -- Rhode Island has the highest appreciation rates in New England. However, in some parts of Rhode Island, appreciation rates are at an all time high. In fact, home prices are rising four times as rapidly as personal incomes. As a result, income levels in many parts of Rhode Island are too low to purchase a median-priced home with a conventional loan.

Home prices in Rhode Island can vary greatly between zip codes. For example, while the median home value for the state of Rhode Island is $133,400, the median home value in the summer of 2005 for Providence, Rhode Island, was $520,000. Recently, Rhode Island average interest rates have been below the national average.

Rhode Island state law prohibits ?subsection 10 mortgages? that exceed either the APR or the points and fees threshold established by lawmakers. Additionally, prepayment fees and penalties are not allowed on any home loan after the first year of the mortgage. If a borrower pays off their home in full during the first year of their mortgage, the prepayment penalties cannot exceed 2% of the balance at payoff.

Rhode Island residents are subject to a sales tax, a ?piggy back? state income tax, and motor fuel tax. However, Rhode Island recently eliminated their motor vehicle tax.