The good news is that buying a house out of state isn't that different from buying a house in the state you're already living in. It's still a lot to manage and there are a few extra steps (and trips) you'll need to take, but it’s feasible if you know what you're doing and if you have the right team on your side.
For example, researching your target out-of-state market thoroughly is essential to ensure you make the right purchasing decision. A comprehensive home buying checklist can guide you through this process. You'll also have to check mortgage requirements, calculate your budget with out-of-state moving costs, and consider what your property taxes will be.
Buying a house out of state: 6 steps to follow
Buying a house out of state is a bit more involved than moving across town and will require more research. You'll also need help making the right connections with the people who will make your home purchase possible. In addition to asking all the right questions when buying a house, these six steps can help you avoid some of the more common mistakes.
1. Research target markets in the state you're interested in.
Here are some important factors to consider when researching target markets:
- School quality if you have kids (Great Schools is a good place to start)
- Commute to work (check the commute at multiple times of day)
- Housing costs
- Noise levels
- Vicinity to shops and restaurants
- Crime rates (check on this FBI site or a local site)
- Local amenities like healthcare and parks
- Cost of living
- Upcoming developments in the area
- Proximity of sex offenders (check on this Department of Justice site)
- Insurance rates (check this FEMA flood map site to see if you're in a flood zone)
The cost of living varies widely by state. It’s also generally lower in a small town than in a large city, so you might consider looking in the suburbs. Other expenses, like annual property taxes and homeowners insurance premiums, also differ in each state.
While you may not be able to choose which state you’re moving to, it’s important to budget for the additional costs (more below).
2. Find the best real estate agent for the state and city you want to move to.
Finding the right real estate agent to coordinate your move can be a game changer. A good real estate agent will have tons of excellent connections that they've vetted through years of working with houses and people who are moving. If you start with the right agent, they can not only help you with your home purchase but also finding the right lender, a good neighborhood, a solid mover, and anyone else you might need to make your home a success.
You can research top agents in your area yourself or you can use an agent-matching service like Clever Real Estate. With Clever, you’ll receive free matches with vetted, high-quality agents in your new city and state. Plus, you can qualify for cash back when you go through Clever. Get your free agent matches today.
3. Check mortgage requirements for the state, county, and metro area you plan to move to.
Depending on what type of mortgage you plan on getting, there may be localized requirements or loan limits in the state, county, or city you're moving to. There are also down payment assistance programs offered in specific states.
The best way to know what's available in the state you're moving to is to meet with a local lender. If you're not sure which lender to choose, start with a real estate agent. They have strong industry connections in the area and can point you in the right direction. Get matched with the best local real estate agents in your area.
For example, USDA loans are available in all 50 states but only to buyers who meet certain income requirements and purchase a property in an eligible rural location. And FHA loans are great for first-time homebuyers and buyers with a low down payment or credit score, but the loan limits vary by state, county, or metro area. If you're planning to use either of these loans, check what the limits are with local lenders.
4. Estimate your total budget to include moving costs and local taxes and insurance.
When buying a house out of state, cost of living, local property taxes, and insurance costs can vary significantly. They might be much higher where you're moving or lower. Either way, planning ahead with a general ballpark of how much you can expect to spend will help your move be less financially stressful.
- Property taxes: Each state has different property taxes, from 0.32% in Hawaii to 2.23% in New Jersey. Depending on where you live, the annual tax bill on a $500,000 home could range from $1,600 to $11,150. Your portion of the taxes for the year in which you buy the home will be due as part of the closing costs.
- Homeowners insurance: Homeowners insurance will also vary, with annual premiums ranging from $6,425 in Nebraska to $834 in Vermont. This expense is typically added to your monthly mortgage payment.
- Moving expenses:The average cost of a long-distance move is $4,300, although that depends on the supplies you use, whether you hire movers, and other factors.[1] Also consider travel expenses, like hotel rooms, gasoline, or plane tickets. A moving cost calculator can help you estimate the expenses.[2]
5. Visit the property in person at least once but ideally more.
Before you make an offer on a home out of state, it's a good idea to visit the property in person at least once. Taking a tour of the property beforehand lets you minimize the possibility of making a bad investment. It's also good to get a feel for the neighborhood in person. There's a lot that goes into a neighborhood vibe that can get lost or concealed when you only see it online or over a video call.
The ideal time for your in-person visit is during the mandatory inspection that lenders require before they finish underwriting the loan. The professional inspector can point out areas that require repairs and give their thoughts on the condition of the property.
6. If you want to cut down on visits before you move, see if you can close remotely.
Closing on your new home remotely is a convenient option that lets both you and the seller finalize the sale quickly, without you having to travel just to sign paperwork. Most states allow remote closings but the specific requirements may vary. The only states that currently prohibit remote closings are the following:
- Alabama
- Connecticut
- Georgia
- Mississippi
- South Carolina
- South Dakota
During a remote closing, you can sign all documents electronically. This includes anything that needs to be notarized. Some companies in states that don't allow 100% remote closing can perform at least some of it online. For instance, you may be able to sign everything electronically except what must be notarized.
Preparation is key when buying a house out of state
Buying a house out of state brings a few extra challenges and research, but it's an exciting opportunity to explore a new place. With an experienced real estate agent on your side, you find a home and neighborhood that meets your needs while also getting connected to a great network in your new state to support you through your home purchase and beyond. Get free agent matches in your new area today.