Overview of Minnesota Mortgages
Minnesota is a prosperous state in the Upper Midwest with high levels of education and voter turnout. Minnesota mortgage rates have remained below the national average over the past decade. Minnesota counties’ conforming loan limits hold steady at average, but there’s a bit more variation in the FHA loan limits.
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Minnesota Mortgage Rates Quick Facts
Historical Mortgage Rates in Minnesota
The North Star State is famously home to 10,000 lakes, Voyageurs National Park and the diverse cultural hub of the Twin Cities, which more than half of its residents call home. Minnesota mortgage rates are typically lower than the national average. The 2016 Minnesota mortgage rates are continuing to follow that trend.
Minnesota Historic Mortgage Rates
|Year||Minnesota Rate||U.S. Rate|
Minnesota Mortgages Overview
Minnesota real estate is a bit more affordable than other parts of the nation. The average home goes for $226,618, which is just below the average sale price of $236,450, according to Zillow.
Minnesota Mortgage Rates
|Percentage of Homes||88.60%|
|Average Property Value||$141,219.18|
|Percentage of Homes||6.70%|
|Average Property Value||$100,964.89|
|Percentage of Homes||1.20%|
|Average Property Value||$118,113.60|
|Percentage of Homes||3.40%|
|Average Property Value||$102,760.80|
The state’s mostly standard home prices is reflected in the fact that the conforming loan limit for every Minnesota county is the standard $417,000. The majority of the state’s 87 counties have a typical FHA limit of $271,050. Fifteen counties have FHA limits of $282,900 or $326,600.
Conforming and FHA Loan Limits by County
|County||Conforming Limit||FHA Limit|
|Lac Qui Parle||$417,000||$271,050|
|Lake of The Woods||$417,000||$271,050|
Keep in mind that some states are “recourse” states, where a lender is allowed to go after your assets or savings for a “deficiency.” That deficiency means the difference between your home’s worth and the amount owed on a mortgage if you go into foreclosure. But Minnesota is a “non-recourse” state, meaning you generally would not be liable for the deficiency in a foreclosure.
Minnesota is also a “deed of trust” state, which is different than a mortgage. When you take out a mortgage in Minnesota you’ll most likely get a “deed of trust.” That means that a lender can bypass the court system if it wants to foreclose on a home. Instead, the lender can involve a third party and initiate a “power of sale” on the home it wants to auction off.
Minnesota has fairly significant seller disclosure laws. Home sellers are required to disclose any physical defects within the home, as well as environmental information - like train tracks near the house where trains can be heard daily. Regardless, it is always a wise idea to get a home inspection before closing on a property.
30-Year Fixed Mortgage Rates in Minnesota
If you are looking for a home loan in Minnesota, more likely than not you will land on a 30-year fixed-rate mortgage. This is the most popular type of home loan and is especially attractive to people who plan on staying in their new home for a long time. As its name implies, a fixed-rate mortgage is one in which the interest rate remains the same for the duration of the loan. In addition to a 30-year loan, you can also consider 15-year or 40-year terms.
The average Minnesota mortgage rate for fixed-rate 30-year mortgages is 3.8%.
Minnesota Jumbo Loan Rates
Conforming loan limits in the North Star State stick to the average $417,000 level because most homes fit within that range. Because of that, there are fewer “jumbo loan” mortgages in Minnesota. These loans exceed the $417,000 conforming loan amount.
If you do need to take on a jumbo loan in order to purchase the Minnesota home that you have your heart set on, remember that your loan will be accompanied by higher interest rates. That may be reason enough to reconsider and stick to a home that fits more comfortably in your budget.
The average jumbo loan rate in Minnesota is 4%.
Minnesota ARM Loan Rates
If you are purchasing a starter home that you plan on moving out of relatively quickly, an adjustable-rate mortgage (ARM) may be something for you to consider. The interest rate on an ARM is generally lower than that on a fixed-rate mortgage for a set period of time between one and 10 years, depending on the terms of the loan. When that introductory period ends however, the rate can change and you can usually count on it going up.
On the plus side, there are less surprises with an ARM than you might think. The loan’s terms lay out how often the rate can increase, as well as the highest maximum amount it can jump to. So you are aware upfront what the highest possible rate is.
Even if you plan to be out of the home before the introductory rate ends, it is best that you check the cap on the interest rate listed in the terms before signing, to ensure that it is something you can afford to pay if your plans were to change.
The average rate for an ARM in Minnesota is ________ (3.31%).
Minnesota Mortgage Resources
For homebuyers looking for a part of Minnesota to call their own, there are resources out there to help you in your mortgage process.
The City of Lakes Community Land Trust Homebuyer Initiated Program offers grants to low- to moderate-income families to help them buy a home. The HIP Affordability Investment Grant reduces the amount of mortgage financing needed to purchase a home in Minneapolis. These grants range from $25,000 to $60,000 depending on the income and size of the household. The Rehab Grant offers up to $25,000 for homeowners to repair their Homebuyer Initiated Program-purchased home.
The Minneapolis Advantage Program offers buying incentives for foreclosed homes in targeted Minneapolis neighborhoods. Up to $20,000 is offered for closing costs, minor repairs or down payment assistance.
The Minnesota Housing Mortgage Credit Certificate (MCC) Program offers a tax credit of up to $2,000 per year for first-time homebuyers in the Twin Cities area. This helps to reduce the buyer’s federal income tax.
|Resource||Problem or Issue||Who Qualifies||Website|
|City of Lakes Community Land Trust – Homebuyer Initiated Program (HIP)||Selected buyers purchasing homes currently on the market, up to $60,000 for home purchase or up to $25,000 for rehab.||Homebuyers who have an income limit of up to 80% of area median income.||http://www.clclt.org/ownership-options/|
|Minneapolis Advantage Program||Offers up to $20,000 for closing costs, down payment, or minor repairs to purchase a foreclosed home in target neighborhoods.||Homebuyers who have an income limit of up to 120% of area median income.||http://ownahomemn.org/resources/program/minneapolis-advantage-program|
|Minnesota Housing Mortgage Credit Certificate||Tax credit for up to $2,000/year.||First-time homebuyers in the Twin Cities metro area.||http://www.mnhousing.gov/wcs/Satellite?c=Page&cid=1391029245339&pagename=External%2FPage%2FEXTStandardLayout|
|USDA Rural Development - Single family loans||Offers payment assistance to increase an applicant’s repayment ability.||Applicants must be without decent, safe and sanitary housing; Be unable to obtain a loan from other resources on terms and conditions that can reasonably be expected to meet; Agree to occupy the property as your primary residence; Have the legal capacity to incur a loan obligation; Meet citizenship or eligible noncitizen requirements; Not be suspended or debarred from participation in federal programs.||http://www.rd.usda.gov/programs-services/all-programs/single-family-housing-programs|
|Home Affordable Refinance Program||Refinancing.||Single family homes and condos that fit within lending loan limits.||http://www.harp.gov/|
And the United States Department of Agriculture Rural Development offers a program in rural Minnesota communities to help residents secure affordable housing. It is worth checking to see if you quality from a loan or grant from the USDA.
Minnesota Mortgage Taxes
Minnesota charges transfer taxes on real estate transactions. Deed taxes are $1.65/$500 or 0.33% and mortgage registry taxes are $0.23/$100 or 0.23%. Discuss this tax with your lawyer or accountant before buying. In Minnesota transactions, the seller typically pays this fee.
If you are a homeowner in Minnesota and you itemize deductions on your taxes, take note that you are allowed to deduct the mortgage interest you pay from your taxable income on both your federal income taxes and your state income taxes.
Minnesota Mortgage Refinance
Homeowners in the North Star State who want to refinance should look into the Home Affordable Refinance Program of Minnesota. The program accepts single family homes and condos, and residents who qualify have access to interest and principal payment reductions, as well as low closing costs.
See Mortgage Rates in These Other States
Best Places To Get A Mortgage
SmartAsset’s interactive mortgage map highlights the best counties in the country (and in each state) for securing a mortgage. Hover over counties and states to see data points for each region, or use the map’s tabs to view the top counties for each of the factors driving our analysis.
Methodology For many people buying a house means securing a mortgage. To determine the best places in the country to get a mortgage we looked at four factors: overall borrowing costs, ease of securing a mortgage, cheap property taxes and cheap annual mortgage payments.
To calculate the overall borrowing costs, we looked at the expected costs over the first five years of a $200,000 mortgage with a 20% down payment, including closing costs. We calculated the ease of getting a mortgage as the ratio of mortgage applications to actual mortgage originations (secured mortgages) in each county. We based annual mortgage payments on the annual principal and interest payments for a $200,000 loan in that location, using average mortgage rates in each county.
Finally, we ranked locations based on these four factors, and then averaged those rankings, giving equal weight to each factor. The areas with the lowest average rankings are the best places to get a mortgage.
Sources: Mortgage Bankers Association, US Census Bureau 2015 5-Year American Community Survey, Informa, Bankrate, government websites, SmartAsset