Buying a home in Minnesota is a smart move now that the housing market is cooling off. After record sales during the pandemic, things are starting to return to normal.
This summer, Minnesota home prices fell by 14 percent, and experts forecast the downward trend will continue as long as inflation keeps rising.
All told, it’s less of a seller’s market than it was two years ago, which means you chose a perfect time to get your foot on the property ladder. But as a first-time homeowner, you can easily overlook hidden costs that bust your budget.
Here’s a list of them below.
Maintenance and Repairs
If you were a lifelong renter before buying your house in the Twin Cities, you’re probably used to your landlord handling plumbing issues and faulty appliances. That responsibility now falls on your shoulders as the brand-new owner of the house.
On average, homeowners can expect to spend roughly $2,000 on necessary maintenance and repairs each year. That breaks down to about $166 per month, making savings tricky but doable with a good budget.
But what happens if your furnace stops working before you’ve had a full year to save? With the Midwest winter on its way, you may want to have a line of credit in your back pocket. If approved, an MN line of credit can help cover urgent repairs when your savings fall short.
Unlike installment loans with fixed due dates, a Minnesota line of credit is a revolving product. That means it won’t close when you pay it off. You can access your full limit again any time you pay off your previous purchases.
Homeowners Insurance
Fixing your furnace is a relatively small job. But what about those major emergencies that cause significant damage to your home, like when a tree falls on your roof? This calls for insurance rather than reaching for an MN line of credit.
Homeowners insurance is not mandatory by law in Minnesota, but most mortgage brokers require you get it before they approve your loan. On average, this costs about $1,785 per year or $149 a month.
Property Taxes
Property tax becomes your responsibility once you leave your rental behind for a place of your own.
The average property tax in Minnesota is 1.05%. You would pay roughly $2,590 in taxes on the median value of a home in the state, which is $246,700.
To make this payment easier to handle, make sure you factor in your property taxes whenever you make a budget. Make sure a portion of each month’s income goes towards this cost.
Utility Bills
Sure, you have to pay for utilities almost anywhere you live. But as a first-time homeowner, just how much it costs to run your house may come as a surprise.
While Minnesota may not be the worst state for energy costs, it’s not cheap either. And with inflation causing prices to rise across the board, they aren’t getting any cheaper.
The average Minnesotan household will pay nearly $500 a month in energy bills. However, you may pay more with winter on its way, as the Midwestern state experiences colder-than-average temperatures.
Bottom Line: Be Prepared
Your first time buying a home can be scary, but this guide has your back. Remember to input these commonly overlooked costs into your budget and you’ll move in with better savings.
