Mortgage rates are increasing. According to Freddie Mac, the average 30-year fixed-rate rose from 3.22% on January 6th, 2022 to 5.25% on May 9th, 2022.

But historically speaking, mortgage rates are still relatively low. Look at any date before December 18th, 2008, and you will see that the mortgage rate was never lower than it was on May 9th. At its highest recorded peak in 1981, the rate exceeded 18.50%! All of this is to say that it is still an excellent time to buy a home, even if we are currently in the midst of an unprecedented seller’s market.

Securing an adjustable rate or long-term fixed mortgage in Minnesota can be very easy. Actually finding the perfect home for you and your family is decidedly less so. But chin up! Here are five tips to keep in mind as you shop for your next home.

1. Secure Financing Ahead of Time

The mortgage process, which includes getting pre-approval, a home appraisal and the actual loan itself, takes an average of 30 days – although it may take twice as long during the busiest home selling months of May, June, July and August.

You want to take care of this important step to buying a home before you do anything else. An online mortgage calculator will provide you with a rough idea of how much you can borrow, but only an actual mortgage lender is qualified to give you the precise amount for your loan.

2. Explore All Your Mortgage Options

Not all mortgages are created equal. A conventional mortgage is not backed by a government guarantee, although it may require a lower down payment than an FHA loan. If you are shopping for a home in rural Minnesota, then you may qualify for a USDA loan with zero down payment. And if you qualify for a VA loan, you can make zero down payment and benefit from very low-interest rates.

Making sense of all the available mortgages can feel daunting. That’s why it’s highly recommended that you schedule a one-on-one meeting with a loan officer before you continue scouring the internet for more information!

3. Don’t Shy Away From Making a Down Payment

Putting zero money down on your home may seem like an appealing prospect, and doing so is indeed advisable under certain circumstances. But do not overlook the advantages of making a down payment on your new home!

When you make a down payment, you will be able to preserve that equity in the face of declining market values. You may also secure a better mortgage rate by lowering your loan-to-value ratio, which alongside your smaller loan amount may reduce the amount of interest you’ll ultimately pay. It is also satisfying to get a head start on building equity in your new home!

4. Pay Attention to School Ratings

Even if you haven’t got children to send to a nearby school, your home’s school district is important. Good school ratings will make your home more appealing to other homebuyers should you ever decide to list your home for sale.

You will pay more for a home in a good school district, however. According to the National Bureau of Economic Research, for every $1 taxpayers invest in their neighborhood’s public schools, surrounding home prices increase by $20.

5. Invest in a Comprehensive Home Inspection

Depending on your agreement with the seller, your home inspection period may last between one to 30 days. Make full use of this window, however long it lasts, as it is your only opportunity to negotiate to have the seller make needed repairs before closing.

Don’t hesitate to hire specialists to inspect your new home’s electrical system, roofing and plumbing. These inspectors may cost more money upfront, but their work will also give you a chance to ask for price reductions that will help you shoulder the costs of future repairs!

Would you like even more homebuying tips from your locally owned and independent bank? Then we welcome you to contact Wadena State Bank or visit one of our locations in Wadena, Deer Creek or Bluffton, MN in person today! We’ll help you make sense of the homebuying process and make certain that you have the right loan for your unique financial needs and life goals.