Buying your first home is a major commitment. Don’t invest in a loan until you read Benzinga’s complete guide to finding the best mortgage in Minnesota. Here’s what you need to know.
Best Mortgage Companies in Minnesota:
- Best for First-Time Home Buyers: Quicken Loans®
- Best for Self Employed Professionals: Wells Fargo
- Best Online Lender: Flagstar
- Best for FHA Loans: Keller Mortgage
- Best for VA Loans: Veterans United
The 5 Best Mortgage Companies in MN
One of the first decisions you’ll need to make when you decide to become a homeowner is which mortgage lender you want to work with. Let’s take a look at a few of our favorite lenders in Minnesota and what they’re known for.
1. Best for First-Time Home Buyers: Quicken Loans®
If you’re a first-time home buyer, you need a lender with a quick, straightforward and convenient pre approval process. Quicken Loans® offers simplicity and a wide range of loan choices through its Rocket Mortgage® platform.
The Rocket Mortgage® platform offers a streamlined mortgage application — it’s so simple that you can complete it on your smartphone or tablet. Quicken Loans offers both conventional and government-backed mortgages specifically for first-time buyers. If you’re looking for an easy way to find a loan online, Quicken Loans is a great place to begin.
2. Best for Self Employed Professionals: Wells Fargo
Many self-employed individuals are surprised at just how much trouble they have getting a loan — even if their income is well above others in their area. When you apply for a loan, your lender needs to see consistent and reliable income. This can be difficult to prove if you’re self-employed and your income varies from month to month.
Wells Fargo is one of the best lenders if you’re self-employed and it has one of the loosest paperwork requirements. Instead of providing years of back tax returns, you’ll only need a recent profit-and-loss sheet and your last 2 months of bank statements. This can mean getting your loan much sooner if you own your own business or if you’re an independent contractor.
3. Best Online Lender: Flagstar
Flagstar’s MyLoan program makes it easy to apply for a loan from your home or office. All you’ll need to get started is your Social Security number, some basic personal information and access to a mobile phone or email. Most Flagstar customers will be able to apply for their loan in as little as an afternoon.
Flagstar offers access to custom mortgage loans as well as government home loan programs to help you get the best possible loan for your situation. This makes it ideal for everyone from first-time buyers looking for an FHA loan to a new professional whose income needs a little more personal consideration.
4. Best for FHA Loans: Keller Mortgage
If you’re considering applying for an FHA loan, you might have a lower credit score or less income to buy a home. If either of these situations apply to you, consider a loan from Keller Mortgage.
Keller Mortgage specializes in FHA and conventional mortgage loans. Its ZeroPlus loan also requires no lender fees. Keller Mortgage’s ZeroPlus loan can also give you a grant of up to $1,000 to put toward your closing costs if you qualify. You can even get a mortgage with as little as 3.5% when you get your FHA loan through Keller Mortgage.
5. Best for VA Loans: Veterans United
If you think that a VA loan might be the right choice for you, speak to Veterans United. As the name suggests, Veterans United specializes in offering low-cost VA loans. The lender employs a full team of mortgage experts who have previously served in every branch of the United States armed forces.
This means that you’ll receive personalized advice from people who have gone through the VA loan application process themselves. In addition to VA loans, Veterans United also offers conventional loans with equally affordable rates.
After you start comparing mortgage lenders, you’ll need to choose a mortgage term and type. But what exactly is a mortgage type and term?
There are multiple types of mortgage loans. Your loan might be backed by insurance from the government or it could be owned by your lender or a mortgage investor like Fannie Mae or Freddie Mac. The type of mortgage loan you accept can influence which type of home you buy, what you pay in mortgage insurance and more.
Your mortgage term is the length of time that you’ll make monthly payments on your loan before you own your home. For example, if you take out a mortgage loan with a 30-year term in January 2020, you’ll make your final mortgage payment in January 2050. Your mortgage term can also influence how often your mortgage interest rate changes.
Let’s take a look at a few of the most common mortgage types and terms.
- Conventional mortgage loans are the most common type of mortgage loan. As long as you meet your lender’s individual standards, you can use a conventional loan to purchase any type of property. To qualify for a conventional mortgage loan, you’ll usually need a down payment of at least 3% and a credit score of at least 620 points.
- FHA loans are insured by the Federal Housing Agency. An FHA loan can allow you to purchase a home with a credit score as low as 580 points and a down payment as low as 3.5%. Some lenders may also allow you to buy a home with a credit score of 500 points or more as long as you put 10% down. To qualify for an FHA loan, your home must meet basic livability standards and you must plan to live in it full time.
- VA loans are insured by the Department of Veterans Affairs. A VA loan can allow you to buy a home with $0 down and a credit score of 620 points or higher. VA loans are only for veterans, active-duty service members and select spouses of those who have died during service to the military. You must meet service requirements before you can qualify for a VA loan and your home must meet livability standards prior to your move-in date.
- 30-year fixed mortgage terms require monthly payments for 30 years before you own your property. The term “fixed” refers to your interest rate. If you have a fixed-rate loan, it means that your interest rate doesn’t change after you sign onto your loan.
- 15-year fixed mortgages only have a 15-year term instead of a 30-year term. You’ll own your home sooner if you choose a 15-year loan, but you’ll also need to pay more each month compared to a 30-year loan. Fifteen-year loans also usually have lower interest rates than their longer-term counterparts.
- 5/1 ARMs have an interest rate that changes throughout the course of your loan. Your ARM begins with a period of fixed interest. After this point, your interest rate can go up or down, depending on how market interest rates are moving. However, your ARM will also include a cap that limits how much your interest rate can rise or fall over the course of your loan.
When you compare ARMs, you’ll see 2 numbers listed. The 1st number tells you how many years of fixed interest your loan starts with. The 2nd number tells you how often your lender will adjust your rate. For example, with a 5/1 ARM, your loan begins with 5 years of fixed interest. After that, your lender will adjust your interest rate every year.
Which Mortgage Lender is Best for You?
A mortgage can be a 30-year long commitment. It’s worth the time and effort to make sure that you’re working with the best possible lender for your needs. Some qualities you’ll want to compare between lenders include:
- Types of loans offered: Not every mortgage lender offers the same loan types and terms. Decide which type of loan you want and look for a lender that offers what you need.
- Loan application process: Do you want a lender that offers the convenience of an online mortgage application? Or would you prefer to visit a physical branch to finish your application? Not every lender has branches, so if you’d prefer an in-person experience, be sure to choose a lender that’s prevalent in your area.
- Current rates and fees: Every mortgage lender uses its own process to determine what you’ll pay for your loan. It’s possible to find the exact same loan from 10 different lenders with 10 completely different APRs. Compare a few lenders’ current fees and interest rates before you choose which lender you want to service your loan.
Lender Credit Score Minimums in MN
Your credit score is a number that represents you as a borrower. Higher scores mean you’re considered to be a less-risky candidate for a mortgage loan. You’ll get access to lower rates and more lender options. If you have a low score, mortgage lenders might see you as too risky of a candidate to qualify for a loan.
Lenders often institute their own minimum scores you must meet before you can get a loan. Let’s take a look at a few lenders’ minimum credit scores.
|Lender||Minimum Credit Score Required|
Current Mortgage Rates in MN
Mortgage interest rates are influenced by a wide variety of factors. The bond market, your local housing market and even the housing supply in your area can all influence the final price you’ll pay for your loan.
You might find that mortgage rates change on a daily basis. We update this table to reflect the most current mortgage rates in Minnesota.
|7/1 ARM (adjustable rate)||0%||0%|
|5/1 ARM (adjustable rate)||3.188%||3.139%|
Average Days to Close on a Loan
The mortgage closing process typically includes 3 steps:
- First, you’ll get a home appraisal — your home appraisal ensures your lender that they’re not loaning out more money than your home is worth.
- Next, you’ll receive an inspection. A home inspection isn’t a requirement to buy a home, but you should get one to make sure that your home doesn’t have any severe problems before you purchase it.
- Finally, your lender will underwrite your loan and finalize your loan paperwork before you attend a closing meeting and officially take control of your property.
The specific amount of time that the closing process will take varies by lender. Let’s take a look at the average time to close between a few lenders.
|Lender||Average Days to Close|
|Foundation Financial Group||45|
|Bank of America||45|
Mortgages in Minnesota: Finding Your Loan
Getting a mortgage loan doesn’t need to be difficult or complicated. But that doesn’t mean you should rush into homeownership. Make sure you understand all of the costs associated with owning a home before you invest. From insurance expenses to property taxes, many new buyers are surprised at just how much it costs to be a homeowner.