Minnesota Mortgage

Finding the Perfect Mortgage in the Minnesota Housing Market

Minnesota Housing Market

Summertime always leads to an increase in housing sales, and this year is no different for Minnesota; as temperatures heat up, so does the Minnesota housing market. In fact, the Minneapolis Area Association of Realtors recently found that in Minnesota this summer, more houses are on the market than ever before. This is good news for buyers, who will be able to easily find optimum housing for affordable prices in Minnesota housing hot-spots, such as the Minneapolis-St. Paul area. However, before deciding on the perfect Minnesota home, buyers need to begin researching mortgage rates.

Minnesota Mortgage Crash Course

When researching the perfect mortgage loan, buyers first need to assess their own budget constrictions and decide how much they can afford to pay each month. Buyers should also research their credit rating and compare it to that of the state and the city they are hoping to buy real estate in. Minnesota offers fixed rate loans, in which the interest rate is fixed until the loan is paid off, and ARMs, or adjustable rate mortgage, in which the interest rates of the loan increase and decrease according to the housing market.

Within each of these categories, buyers can choose conforming or jumbo loans. Each year, two quasi-government agencies, Fannie Mae and Freddie Mac establish guidelines that determine the maximum mortgage loan amount, minimum borrower credit scores needed to qualify for mortgages, minimum borrower income needed to qualify for mortgages, down payment requirements, and location and type of suitable properties. These guidelines also determine whether a loan is conforming or jumbo. Conforming loans fall within these guidelines; they meet the bank funding criteria. Jumbo loans exceed the maximum loan amount. Most mortgage falls within the guidelines of the conforming loan, but some highly priced real estate requires a jumbo loans.

Basically, if a buyer wants an expensive home, they need a jumbo loan. Jumbo loans are often more difficult to manage than conforming loans, as their interest rates are often higher, interest rate standardization does not apply, and many money lenders do not offer jumbo loans (so the buyer will have to do more shopping around).

What are typical Minnesota Mortgage/Credit rates?

In Minnesota, buyers can obtain conforming fixed loans that offer ten, fifteen, twenty, or thirty years to pay back mortgage loans. They can obtain 1/1, 3/1, 5/1, 7/1, or 10/1 conforming ARMs. They can also obtain fifteen or thirty year pay-back time frames for jumbo fixed loans; and 1/1, 3/1, 5/1, 7/1, and 10/1 jumbo ARMs. The average credit rating in Minnesota is 707, which is much higher than the national average credit score of 677. In fact, Minnesota has the second-highest state average, following South Dakota at 710.

How does an individual’s credit rating affect their chances of finding good housing in Minnesota?

Each individual’s credit rating affects their possibility of being granted a loan and also the amount of interest that the individual must pay each month. Because Minnesota has a high average credit rating, obtaining optimum housing will be difficult for people with average or low credit scores. Additionally, buyers with credit scores that are considered average in other states, and therefore easily granted mortgage loans with affordable interest rates, could be considered low-scoring in Minnesota, and therefore have a more difficult time finding a mortgage loan with an affordable interest rate.