How Much Will Your Mortgage Be in Minnesota?
In Minnesota, the housing market in Minneapolis and St. Paul are competitive, but home prices are quite affordable in the rest of the state.
Minnesota is home to about 5.5 million residents and is the 12th largest in the country in terms of geography. The largest metro areas are Minneapolis, St. Paul, Rochester, Duluth, and Bloomington.
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Factors That Can Affect Your Minnesota Mortgage Calculations
Home Prices in Minnesota
The median sale price in Minneapolis and St. Paul rose over 3% between May and June 2017 from $250,000 to $259,000, and homes in these cities have been in high demand for some time. Other cities will not cost you quite as much—Duluth, for example, has a median listing price of $219,900 and a median home value of $179,800. In Rochester, the median list price is $269,900 and the median home value is $228,500.
The most affordable cities in the state in terms of closing costs, property taxes, homeowners insurance, average mortgage payments, and median income are Montevideo, Ostego, Redwood Falls, Byron, and Austin.
Minnesota Property Taxes
The state's average effective property tax is 1.15% of your home’s value, which is slightly higher than the national average of 1.08%. Your property taxes are derived from levies on net tax capacity and market value levies—the former are collected by the county to fund government functions, while the latter are typically approved by voters for public projects.
Effective tax rates will vary based on the location of the property.
Your county will determine the value of your home, and some will look to home sales in the previous 12 months to assess the market value each year, meaning the property’s value could rise or fall during this time.
Minnesota Closing Costs
You will need to pay closing costs on your new home, which is a bundling of fees pertaining to your mortgage lender and public entities who are involved in the transaction. Your lender fees will include tax service, underwriting, broker charges, document preparation, commitment fees, and origination points.
Minnesota Job Stats to Consider
Manufacturing, biosciences and healthcare services, data centers, banking and tech are the biggest drivers of Minnesota's GDP. 17 Fortune 500 companies are centered in the state, including 3M, Best Buy, UnitedHealth Group, Target, and Land O'Lakes. The state's largest employers are the Mayo Clinic, the State of Minnesota, the Federal Government, Target, and the University of Minnesota.
As of September 2019, Minnesota had an unemployment rate of 3.2%, just under the national average of 3.5%. The state’s per capita income of $57,515 is also above the national average of $54,420, and the last decade has witnessed steady growth in incomes across the state.
Job Stats (Civilian Labor Force, Employment, Unemployment)
Other Minnesota Costs That Can Affect Minnesota Mortgage Calculations
Homeowner’s insurance costs in Minnesota have to account for damage done by potential natural disasters. In 2019, the average yearly premium for homeowner's insurance in the state was just over $1,000. The Minnesota Commerce Department can offer you more information on how home insurance operates in the state to help you understand what is included in your coverage. Additionally, the Minnesota FAIR Plan can provide coverage for those who cannot find homeowner’s insurance from a private insurer.
One cost you should factor in during the initial stages of buying a home in Minnesota is paying for a home inspection, a one-time purchase prior to making an offer on a house. Home inspections, which cost between $300 and $500 depending on the size and type of the home, examine the home’s heating, roofing, plumbing, and structural systems to help you make a better-informed offer.
You should strongly consider purchasing title insurance for your new home as well at closing. This can protect you from things like unpaid taxes, liens, missing heirs, easements, and other threats. While many mortgage lenders will require you to buy a policy to cover the lender’s interest in the property, you will also be able to choose to purchase an owner's policy or not. In Minnesota, the homebuyer will usually pay the premium.
Mortgage Taxes in Minnesota
Some states charge a mortgage tax, Minnesota being one of them. The state will collect 0.23%, and the counties of Ramsey and Hennepin will collect a further 0.01%. There is a deed tax as well the property seller will pay which is 0.33% for all the state other than Ramsey and Hennepin counties, which are 0.34%.