A Guide to Buying a House in Missouri

Want to purchase your dream home in Missouri? Understand the buying process, costs, and legalities. Read on for a guide to a successful purchase.

Financial Planning
December 17, 2023
A Guide to Buying a House in Missouri

Whether you’re a first-time home buyer or just searching for a new space in Missouri, buying a home is an exciting journey. It can also be daunting, no matter how familiar you are. But the better prepared you are to embark on the homebuying journey, the more efficiently you can move through it –– and the sooner you can move into the property of your dreams.  

To help you navigate the homebuying process, we’ve assembled this comprehensive guide. Read on for everything you need to know about buying a house in Missouri –– from saving up to closing on your dream home and other key milestones along the way.

Buying a House in Missouri: What You Need to Know

Before diving into what a home buyer can expect, let’s first explore the nuances of buying a house in Missouri. Like many places across the country, the Missouri housing market has been trending upward over the last few years, with prices in St. Louis increasing 2 percent yearly, according to information gathered by Redfin.1 But there are several other factors to consider when looking for Missouri real estate, and the more informed you are, the smoother your journey will be. 

A Competitive Market 

Across the country, demand for housing far exceeds available inventory. The same is true in popular Missouri metropolitan areas like Kansas City and St. Louis, resulting in intense competition and even bidding wars. You can combat this competition by being as prepared as possible going into your home search, ensuring you’ve got everything you need to secure the home of your dreams –– before someone else does. 

Out-of-Towners Want In, and Residents Rarely Want to Leave

With costs of living and remote work on the rise, many big-city-dwellers are leaving locales like Los Angeles, San Francisco, and Washington for Missouri. In fact, the same analysis from Redfin says that .44 percent of all would-be home buyers searching on their platform have St. Louis in their sights. Nearly half a percent of buyers might not be much to worry about, but this is partnered with the fact that 80 percent of existing St. Louis and Missouri homeowners have no interest in leaving the state for their next property. This statistic highlights the competition for housing amidst limited inventory, underscoring the importance of working with a well-connected real estate professional to discover exciting new areas and off-market deals. 

Bargains Are (Relatively) Hard to Come By

Aided by an expert (or armed with great patience), you may find the home of your dreams in Missouri. Just don’t expect to pay below the asking price for it. Again, Redfin’s analysis of the St. Louis housing market showed that less than 1 percent of all homes sold in 2023 went for less than the listed price. That said, the median sale price of homes in St. Louis is still 50 percent lower than the national average, making living in St. Louis a bargain on its own –– even if you aren’t getting a deal on your next home. 

Keeping these regional housing market specifics in mind, we can begin the process of buying a house in Missouri. 

Learn more about Truehold's flexible sale-leaseback

Click here

Saving for Your Downpayment and Closing Costs

For most home buyers, the process begins with pulling together a downpayment. How much this downpayment should be, however, can vary greatly. Historically, budget experts would say that 20 percent of the home’s total purchase price was ideal, but with housing prices on the rise and some lenders accepting as little as 3 percent down (or 0, in some cases), this number has shrunken considerably.2 Now, the rule of thumb seems to be: How much can you put down without compromising your overall financial wellness? To answer this question, prospective buyers should carefully consider their financial goals and craft a comprehensive budget to match.

When building your budget geared toward saving for a home, your goal should be to save as aggressively as possible without sacrificing other elements of your financial health. To borrow from the 70/20/10 budget, which categorizes spending into needs, wants, and savings contributions, you should account for your needs –– bills, food, shelter –– before wants and savings. In this case, your downpayment is categorized as a savings goal but could also fall under the want category. This allows you to adjust your spending on other wants (like meals out to eat, streaming subscriptions, and shopping trips) to beef up your downpayment savings. 

Saving for your downpayment might sound like it requires a lot of sacrifice. And in some cases, it can. Given the higher-than-average mortgage rates, however, your well-developed downpayment savings can have an outsized impact on the next 15–30+ years of your life. The more money you put down, the less you’ll have to borrow –– and at the current 30-year interest rate of 7.9 percent, even a difference of $10,000 can nearly triple over the life of your mortgage.3 For this reason, it’s also important to factor in your closing costs when saving for your downpayment. Closing costs are effectively administrative fees you pay for financing a home, generally between 3 and 6 percent of a home’s total value.4 Financing this amount over the life of a loan can be costly, so factor this into your downpayment savings strategy to save big in the long run. 

If you’re an existing homeowner, you may be able to factor a sale-leaseback into your savings strategy. This process allows you to sell your home in exchange for your equity, but continue living in it as a renter while you continue your homebuying journey. This can alleviate both the pressure of saving up for your downpayment and the stress of selling your home on a tight timeline. 

We’ve discussed the impact your downpayment can have on your future. But what about the impact your downpayment can have today? In Missouri’s competitive market, it can quite simply mean the difference between snagging your dream home or watching it slip through your fingers. Your best bet is to prepare your downpayment –– accounting for closing costs –– before you start your home search to ensure you’re ready to act when the right one appears. 

Get Pre-Approved for a Mortgage

After you’ve built a comprehensive budget and compiled a downpayment that aligns with your financial goals, you can begin the mortgage pre-approval process. This will not only help you streamline the homebuying journey and give you a clearer idea of your long-term costs but will also help position you as a serious and qualified buyer in the eyes of sellers (and your competition.) 

Although the Federal Reserve has a hand in setting overall interest rates, your individual mortgage rate will come down to the price of your loan, the specific location of your ideal Missouri property, the length of your loan, and your credit score. If you’re in the process of rehabilitating your credit, consider holding off on pre-approval until your score is closer to where you want it –– giving you better odds at a lower rate. 

When shopping for pre-approval rates, do exactly that: shop. By getting quotes from multiple lenders, you can secure the best possible mortgage rate and the loan product that best fits your needs. Home loans come in several varieties for different types of borrowers with different desired loan terms. Some of these mortgage types include: 

  • FHA loans
  • VA loans
  • Fixed-rate mortgages
  • Variable mortgages

Research and compare different mortgage products to find the one that best fits your situation, and consult a Missouri mortgage professional to choose the one that aligns with your long-term financial goals.

Finding a Local Agent

Navigating the housing market is smoother with any real estate professional by your side. But an agent well-versed in the Missouri market can make the quest for your dream home feel like a stroll in Tower Grove Park. The importance of a local real estate agent is twofold. For one, a local agent will know your desired Missouri neighborhood well enough to point you toward the hotspots –– and ensure you aren’t overpaying compared to similar sales in the area. Additionally, an agent that’s connected in the community may be able to point you in the direction of an off-market property. This can be a game-changer for your search, helping you cut through competition and end up with a truly hidden gem. 

To find the right local agent, it’s recommended that you consult (and even interview) several agents before cementing the partnership.5 Once you find the right fit, work with your local agent to clearly define your priorities and preferences. Are you looking for a quiet, family-friendly neighborhood, or do you want your finger directly on the pulse of St. Louis? By clarifying your preferences and maintaining open communication throughout your search, you and your agent can identify more properties that perfectly match your criteria, saving you time and effort and keeping you on track toward the Missouri home of your dreams.

Choosing the Ideal Location

Most immediately go to St. Louis or Kansas City when thinking of Missouri locales, but there’s much more to the Show-Me state than these two notable names. Your local real estate agent will help you understand the nuances of your chosen area, but you’ll want to conduct your own research beforehand to ensure you choose the right location. Factoring in your goals and priorities, consider the following when searching for the ideal Missouri location. 

Your Lifestyle

The major metros might be great for those looking to live the city life or build a future in their excellent suburbs (like Clayton or Chesterfield). But with all the state has to offer, looking for an area that suits your lifestyle will help narrow your search. If you’re a fan of the outdoors or a stroll through the park is on your weekend to-do list, places like Joplin might fight your lifestyle. Or, if you’re looking for a youthful town with heaps of school spirit, consider Columbia: home of the Mizzou Tigers.

Your Priorities

To some, a home is a place to rest one’s head after an adventure-filled day. To others, it’s the focal point around which life is centered. And while you may not identify with either of these statements –– or fall somewhere in the middle –– determining the ideal Missouri location will require you to contemplate your priorities. If you’re not one of the many remote workers relocating to St. Louis, a short commute to the office may be a top priority. Or, if you have children, proximity to top schools may guide your decision-making. No matter what you’re hoping to get out of your home, keep your priorities close when conducting your research.  

Your Future

Missouri is expected to grow another 6 percent by 2030, and trends suggest the state’s population will see a 1.2-million-person increase over the next three decades.6 So, when you think about the best place to plant roots, it’s important to consider your future and your growth aspirations. This introspection can take many forms, from contemplating starting a family to calculating the future value of a potential home after local development comes to fruition. As we mentioned earlier, buying a home in Missouri is as much about your today as it is your tomorrow, so give both equal weight when searching for the perfect place. 

Once you’ve found a location, do what you can to experience these locales for yourself. Sample the cuisine, test out the coffee shops, and walk the tree-lined streets. If it feels like a fit, you and your agent can hone in on the home of your dreams.  

Find Your Dream Home and Make an Offer

After a thorough appraisal of your lifestyle and priorities (now and for the future), and with the help of a local agent, you should be able to narrow down your search to the one –– or the two. But while it’s taken a great deal of hard work to identify the perfect property, the job isn’t done yet. And in some ways, it’s just getting started. 

This stage is where you and your agent work closely to craft a compelling offer. Given the nature of the Missouri housing market, you’ll want to prepare to negotiate to come out ahead of your competition. Leveraging their knowledge of recent transactions and their relationships with local sellers’ agents, your real estate agent will help you develop a reasonable (but competitive) offer. However, there are additional steps you can take to potentially better your chances. Some of these include:

  • Getting pre-qualified
  • Remaining flexible to extended sale timelines
  • Responding quickly to questions 
  • Set automatic counteroffers that fit your budget

Some aspiring buyers will even go so far as to waive contingencies –– forfeiting the right to pull out of the deal in the event of a failed inspection or a lower appraisal –– but this can backfire in a big way. Trust your gut, rely on your agent’s guidance, and exercise caution when considering this risk. 

Schedule Your Inspection

Finally –– your offer has been accepted, the contract is signed, and the keys to your dream home are in hand. Now, all that’s left to do is protect your investment (and appease your lender) by scheduling a thorough home inspection. This step ensures there are no hidden issues with the property, giving you an opportunity to negotiate repairs, a price reduction, or even back out of the sale before finalizing the deal. 

While the home may seem perfect at first glance, especially after a lengthy house hunt and professional staging, a home inspection is essential to uncover any potential issues. If possible, attend the inspection and ask questions about the inspector’s findings. Should issues arise, learn as much as possible to form solid negotiation points with the seller. Your agent should be able to use their local knowledge to assist in negotiating repairs or price adjustments based on the inspection findings –– but try to avoid confrontation no matter what the inspection uncovers. Rather, adopt a collaborative approach to ensure both parties are satisfied with the final terms and the closing process is smooth. 

Buy on Your Own Time with Truehold

While buying a house in Missouri will be a unique experience for every buyer, the above milestones will likely be present in every buyer’s journey. Because of the many steps required to buy houses in Missouri, this process can take six months or more –– before factoring in the time it takes to sell an existing home. For some homebuyers, a year or more can be simply too long to wait. Fortunately, Truehold can help.

No, we can’t speed up the homebuying process or expedite the decline of interest rates, but we can give you the flexibility you need to buy on your own time and sell when you’re ready. Through our sale-leaseback, you can sell your house to Truehold in exchange for your home equity, then continue to live in your home as a renter while you embark on your homebuying journey. This eliminates the stress of selling a house in Missouri while you shop and ensures you can pounce on the home of your dreams as soon as it becomes available –– with valuable home equity in hand. 

Whether you explore a St. Louis sale-leaseback, or move forward with a Kansas City sale-leaseback, you’ll simplify the home-buying process. 

If you’re a Missouri homeowner, connect with one of our trusted advisors to get a cash offer on your home within 48 hours. 

Sources:

1. Redfin. St. Louis, MO Housing Market.  https://www.redfin.com/city/16661/MO/St-Louis/housing-market 

2. Bankrate. How much is a down payment on a house? https://www.bankrate.com/mortgages/how-much-is-a-down-payment-on-a-house/#how-much 

3. CNN. The best mortgage interest rates today: December 4, 2023. https://www.cnn.com/cnn-underscored/money/mortgage-interest-rates-today-12-04-2023 

4. Rocket Mortgage. Closing Costs: What Are They, And How Much Will You Pay?  https://www.rocketmortgage.com/learn/closing-costs 

5. Nerdwallet. How to Find the Right Real Estate Agent for You. https://www.nerdwallet.com/article/mortgages/are-all-real-estate-agents-the-same-which-realtor-is-right-for-you 

6. Missouri Office of Administration. Population Trends. https://oa.mo.gov/budget-planning/demographic-information/population-projections/population-trends 

Truehold Symbol
Chat with a real person & get an offer on your home within 48hrs.
Valid number
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Further Reading

View all posts

Ready to get started?

Chat with a real person & get an offer for your home within 48 hours.

Call (314) 353-9757
Get Started