Current Mortgage Rates in Minnesota (MN)

The post Current Mortgage Rates in Minnesota (MN) by Melinda Sineriz appeared first on Benzinga. Visit Benzinga to get more great content like this.

Minnesota is known as the Land of 10,000 Lakes. You can choose between urban living or the wide-open spaces of rural landscapes if you’re buying a home there. Let’s take a look at the mortgage rates Minnesota homebuyers should expect. 

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The Best Mortgage Lenders in Minnesota for Rates:

• Best Overall in Minnesota: Rocket Mortgage®
• Best for Low Credit Scores: Bell Bank
• Best for First Time Home Buyers: US Bank
• Best for Mobile Homes: Fairway Independent Mortgage Corp
• Best for VA Loans: Veterans United

What Is a Mortgage Rate?

Your mortgage rate is the amount of interest you pay on your home loan. When you buy a home, unless you pay cash, you get a mortgage through a lender. The lender essentially buys the house for you and you pay back the lender. The lender charges interest to cover the costs of servicing the loan and to make a profit. 

What Factors Impact Your Mortgage Rate?

Several factors impact your mortgage rates. Some factors influence the rates everyone receives. Other factors affect the rate that lenders offer you: 

The Economy

The economy impacts interest rates across the board. When the unemployment rate is low and the economy is booming, interest rates tend to go up. When the economy isn’t doing as well, interest rates tend to drop to encourage more people to buy homes. 

Your Credit History

Lenders look at how you’ve handled credit in the past to get an idea of how you’ll handle your mortgage. Lenders may offer you a higher rate if you have issues such as late payments or collection accounts on your credit report.

Your Debt and Income

Lenders want to be sure you can handle your mortgage payments. Lenders add up your debt payments, including your mortgage payment, and compare it to your pre-tax income. Ideally, your debt payments add up to 43% or less of your pre-tax income. Some lenders allow up to 50%. 

Your Down Payment

The more you pay in advance as a down payment, the less lenders have to pay on your mortgage. This lowers the risk to your lender. Since the risk is lower, lenders may offer you a lower interest rate. 

Your Loan Type and Term

You’ll be offered a higher interest rate if you have a longer loan term. Government-backed mortgages may have higher interest rates than conventional mortgages in some circumstances.

Interest rates also vary from lender to lender, so it’s best to get a purchase quote from more than one lender. 

What Is a Mortgage Type?

Not all mortgages are the same. Mortgages come in a variety of types, each of which has different features: 

Conventional Loans

Many lenders offer conventional mortgages. The government doesn’t insure conventional mortgages. That means lenders may have higher minimum standards for those loans. You may need to have a higher credit score to qualify for a conventional mortgage, for example. You may need to make a 20% down payment on a conventional mortgage. Each lender has its own requirements. 

FHA Loans

The Federal Housing Administration insures FHA loans. This allows lenders to offer mortgages to people with lower credit scores. You can have a credit score as low as 580 and qualify for an FHA loan. If you can make a 10% down payment, you can have a credit score as low as 500. FHA loans also have a low minimum down payment requirement — 3.5%. FHA loans may have a higher interest rate than conventional loans. 

USDA Loans

The U.S. Department of Agriculture backs USDA loans. These loans are designed to help moderate- and low-income borrowers buy homes in rural areas. Some USDA mortgages don’t require any down payment. You do need to meet income requirements to qualify for a USDA mortgage. You also need to buy a home in designated rural areas. 

VA Loans

The Department of Veterans Affairs insures VA mortgages. Current service members, veterans and some spouses may qualify. VA mortgages don’t require a down payment. VA loans typically have competitive rates. You also don’t have to pay for private mortgage insurance, which can drive up your monthly mortgage payments. 

You may also see most of these mortgage types when you get a refinance quote. 

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What Is a Mortgage Term?

A mortgage term is how long your mortgage will last if you just make the required monthly payments. The mortgage term impacts your interest rate. Longer terms typically have higher interest rates. 

Here are a few common mortgage terms:

30-Year Fixed

A 30-year fixed-rate mortgage offers the same interest rate for the entire term. Your monthly payments are also the same. If you just pay your required monthly payments, your loan will be paid off in 30 years. 

15-Year Fixed

A 15-year fixed-rate mortgage also offers the same interest rate for the entire term. You have the same minimum monthly payment for 15 years. At the end of 15 years, you’ll have your home paid in full. 

5/1 ARM

A 5/1 ARM is an adjustable-rate mortgage. Adjustable-rate mortgages typically offer an introductory period with a fixed rate. After the introductory period, rates adjust on a schedule your lender establishes. With a 5/1 ARM, you have a 5-year introductory period. After that, your rates adjust up or down once per year. The introductory period may have a lower interest rate than a comparable fixed-rate mortgage. 

A 15-year fixed-rate mortgage will usually have a lower interest rate than a 30-year fixed-rate mortgage. Ask lenders for quotes for the same type of mortgage. This allows you to easily compare terms and go with the lender with the best rates. If you get quotes for different types of mortgages, it’s more challenging to make an apples-to-apples comparison. 

Current Mortgage Rates in Minnesota

Mortgage rates change daily. Lenders adjust mortgage rates up or down to reflect market conditions. These changes might seem small, but even a small interest rate can make a big difference in how much interest you pay over the life of your mortgage. At Benzinga, we update these rates regularly to reflect these frequent changes. 

Calculating Interest in MN

Your lender calculates your interest every month. As you make your monthly payments, your loan balance gets lower. This means that each month, more of your monthly payment goes to your balance and less goes to interest. You pay more in interest if you have a longer loan term. Here’s a look at how much you’ll pay in interest over the life of your mortgage in 4 Minnesota cities:

Lender Credit Score Minimums in MN

Your credit score is a 3-digit number that gives lenders a snapshot of your credit history. The higher your credit score is, the better. Making late payments, having accounts in collections and using a lot of your available credit all bring down your score. Lenders have minimum credit scores they will accept to consider you for a mortgage.

If you’re below the minimum, you may need to work on your credit before you can get a mortgage.

5 Best Mortgage Lenders in Minnesota

You should contact multiple lenders to get the best mortgage rate. We’ve researched and rounded up the 5 best mortgage companies in Minnesota to help you start your search. 

1. Best Overall: Rocket Mortgage®

Rocket Mortgage® offers a seamless, entirely online experience. It also offers excellent customer service via chat or phone around the clock.

This makes it easier to get in touch with than most mortgage companies.

Rocket Mortgage® offers conventional and government-backed mortgages. Start your refinance or purchase with Rocket Mortgage® by Quicken Loans®.

2. Best for Low Credit Scores: Bell Bank

If you have a low credit score, FHA mortgages may be your best option.

Bell Bank is a regional bank with branches throughout Minnesota. It offers expertise in the FHA mortgage process.

It’s also an approved lender for Minnesota’s homebuyer assistance programs, which may offer help with your down payments. 

3. Best for First Time Homebuyers: US Bank

U.S. Bank is one of the best lenders for first time buyers.

It offers a painless, online prequalification process.

It also has branches throughout Minnesota for in-person education and guidance. You can also easily reach its loan officers by phone or email.  U.S. Bank offers conventional, FHA and VA mortgages. 

4. Best for Mobile: Fairway Independent Mortgage Corporation

You may already do lots of things with your phone.

You can even apply for a mortgage with Fairway’s mobile app. Fairway’s app also allows your loan officer to communicate with you quickly so you can get your loan ASAP.

Fairway has branch offices throughout Minnesota if you prefer an in-person experience. 

5. Best for VA Mortgages: Veterans United

VA mortgages are complex.

If you qualify, you may want to work with a lender that specializes in VA mortgages.

Veterans United provided more VA loans than any other lender in 2018. It has a user-friendly website and excellent customer service ratings. 

Finding the Right Minnesota Mortgage

Finding the right Minnesota mortgage takes time. Talk to multiple lenders and review each quote carefully. Look for expenses like origination fees and application fees. Take all the costs into account when deciding on a lender. 

If you’re a first time homebuyer, let lenders know that too. They may be able to connect you with resources to help you through the mortgage process. 

Frequently Asked Questions

The post Current Mortgage Rates in Minnesota (MN) by Melinda Sineriz appeared first on Benzinga. Visit Benzinga to get more great content like this.