WHO CAN GIVE A GIFT?
WHO CAN’T GIVE THE GIFT
DOCUMENTING THE GIFT
THE GIFT FOR DOWN PAYMENT BOTTOM LINE
Minneapolis, MN: We all know one of the biggest obstacles to buying a home is the lack of down payment. Many first time home buyers have the credit, and income to handle their own home, but just can get over that down payment hurdle.
FHA Home Loans have always been a popular first-time home buyer choice, because the program only requires a 3.50% down payment.
Both Fannie Mae (HomeReady) and Freddie Mac (HomePossible) have just 3% down conventional programs. These existing programs have both income guidelines based on the properties location. You must also be a first time home buyer, which is defined as someone who has NOT owned a property in the past three-years.
Both HomeReady and HomePossible require the buyer to take first time home buyer education classes, and for doing so, you get a slightly better interest rate, and slightly cheaper monthly mortgage insurance rates. If you meet the qualifications for these programs, they are both pretty awesome deals.
But if your income is too high, or if you’ve owned a home in the last three years, you still have a low 3% down payment program offered by Fannie Mae, that has been around for a few years.
Freddie Mac has just announced their version of the 3% down payment program for everyone, which they are calling HomeOne. The program starts July 29, 2018.
Very similar to Fannie Mae’s program, the new Freddie Mac program does NOT have any income or geographic restrictions, and it is not restricted to first time home buyers. The program is only available for single family (one unit) properties.
As with all home loan programs, the new HomeOne mortgage down payment requirement is just one of many aspects used to determine loan approval, including credit scores, debt ratios, property, and overall ability to safely afford the home payment.
We lend on these programs in Minnesota, Wisconsin, and South Dakota. Just complete the quick and secure online application to determine if HomeReady, HomePossible, and now HomeOne is right for you!.
Minneapolis / St Paul, MN: Buying your first home can be a fun exciting time. It can also be stressful, especially as there is a lot of misinformation spread from well intended friends, family, and even Real Estate Agents.
When it comes to first time home buyers, they are usually told about special programs for first time buyers, and classes you need to take. The first thing to understand, is most mortgage programs DO NOT REQUIRE a home buyer education class, UNLESS you are getting down payment assistance.
Most people don’t want to take a class unless necessary. Therefore we generally suggest you complete a full Loan Application for review to determine if you need a class. There are never any obligations to review your situation.
The second major thing to know is that IF you DO need to take a class, you need to take the correct class. Almost ALL classes put on by a Real Estate Agent, Bank, Credit Union, or Mortgage Company are really only marketing gimmicks designed to get you introduced to those people, so you hopefully use them as your Real Estate Agent or Loan Officer. These classes DO NOT COUNT and should be avoided.
Here in Minnesota, like most other states, to obtain down payment assistance as a first time home buyer, you ARE REQUIRED to attend a Minnesota state approved 8 hour home buyer education class. This class is mandatory for programs like the Minnesota Housing Finance Agency (MHFA) Start Up loans, Dakota County First Time Home Buyer, City Living, and many other programs where you get assistance. The class is also required to get reduced monthly mortgage insurance with the HomeReady conventional 3% down payment program
This class can be taken online, or in person at multiple locations across the state. There are different costs for each class ranging from as low as $25 to $75 per household. Only 1 borrower is required to attend.
The official required class is a NO PRESSURE, NO OBLIGATION class. No software, books, or anything else to buy. They will teach you about making good decisions in your future home buying experiences, and provide great information about the qualifying process, improving your credit score, and much more. There is no better way to learn about being a First Time Home Buyer in Minnesota than to attend AN APPROVED home buyer education class.
Upon completion of the class, you will received the required completion certificate that you need to give to your Loan Officer.
Minneapolis / St Paul, MN: Can you really get a mortgage pre-approval online in 10 minutes? Yes. Should you? Probably not. It’s 2018 as I write this, advancements to our lives, along with instant gratification is everywhere. Why go to the store when you get better selection and two day shipping from Amazon. No need for old fashion video stores, everything is on Netflix, Amazon Prime video, or your HBO Go app. Twitter, Facebook, the internet, and of course Smartphones and iPads have replaced home computers for many people.
So it is no surprise that many mortgage lenders are now advertising instant 10-minute mortgage loan pre-approvals while you stand in front of the house you just looked at. The biggest company pushing these is Quicken Loans ® “Rocket Mortgage”®.
Sounds cool, and their commercials are really funny… But wait a minute… This is the largest financial transaction of your adult life. Can it really be done on your cell phone?
The traditional process is you complete a loan application. You do that in person, over the phone, or by completing an online loan application. From there, a real live person reviews the information, pulls your credit report, talks to you about your situation, uses knowledge and expertise to explore all avenues, issues, and different loan options (all good ideas).
Assuming that all looks fine, your application is processed through one of the major AUS (automated underwriting system) of Fannie Mae, Freddie Mac, FHA, etc, to get your initial “looks good” answer.
This automated underwriting system process only takes a few seconds, and with the initial “looks good” answer to your loan application, you got a loan, right? NO, not even close. This is just AN INITIAL step.
Next, just because the AUS indicates ACCEPT (yes), there are still pages of information and requested items that need to be received and reviewed for accuracy BY ALL LENDERS. Common items are W2’s, pay stubs, bank statements, tax returns. Depending on your situation, you may need further items, like bankruptcy papers, divorce decrees, and more.
You generally need to gather all those documents and submit them to your lender for review to receive a proper Pre-Approval.
After you find the exact house and sign a purchase agreement, the lender orders the appraisal, title review, and everything else is sent to the underwriter for final review. Generally speaking, a proper professional pre-approval will equal a successful final approval by underwriting in the final stage of the process. A sloppy pre-approval, not properly review??? Scary stuff.
Your largest financial transaction of your life is too important to trust to just anyone, let alone a computer. You need the wisdom and input from a licensed, experienced, and professional Loan Officer.
The difference with their app, is that after taking the initial application information online (like thousands of other lenders), their app jumps right to running your information through the major automated underwriting system to get that initial pre-approval. Yes, that can take just 10 minutes.
Next, they attempt to gather some of your basic supporting documents electronically. Rocket Mortgage ® will ask you to link your financial accounts to their program. This allows them to check your financial statements online without you having to send them the physical copies of your banking information. Again, sounds cool, but in the day of cyber hacking, do you really want to give them access to your information electronically?
Next, a huge portion of applicants are not able to take advantage of instant document verification, and still need to submit many, if not all of their documents the traditional way – completely eliminating the cool factor.
You can also get instant rate quotes, cost quotes, and options like to buy discount points. Again, sound nifty, but…
I review a LOT of online mortgage applications. Rare is it that I don’t need to change or adjust any application data before running it though the computers. Data errors, missing data, and income that isn’t allowed to be used for qualifying are all too common.
For example, I recently had a client input $50,000 a year for his wife at a job she has been at for about 9 months. But, as I interviewed him, I discovered that her new job is 100% commission based. Standard underwriting rules for commission based income require the person to have two-years on the job, and that we average the two-years of income. Therefore her job qualifying income was ZERO. Oops… Now you are running around with a quick pre-approval looking at houses you will never actually get final approval to buy.
Another recent applicant answer the “Do you pay alimony or child support” question online NO. But when I physically reviewed his pay stub, it clearly showed the deduction for child support. This additional debt lowered the maximum house he could buy $50,000. Again, potentially someone running around with an invalid pre-approval letter.
For as cool as all this sounds, it has huge disadvantages.
First is not having the opportunity to talk to a human loan officer. Consumers may lose out by applying for a mortgage that isn’t necessarily the best choice for their situation. I get clients all the time who complete my online application for one loan type, but I end up switching them to something better suited for their situation. This is because most applicants usually have several mortgage options available to them. Since most consumers are not mortgage experts, this is clearly an area where a human loan officer could help steer their client in the right direction.
Your largest financial transaction of your life is too important to trust to just anyone, let alone a computer. You need the wisdom and input from a licensed, experienced, and professional Loan Officer.
They typically don’t offer first time home buyer programs, and don’t offer down payment assistance programs. This is especially troublesome, as younger first time home buyers are the ones more inclined to think apply on your phone is cool.
When buying a home, your best move is to always work with a local lender the traditional way. The guy located in your geographic area, with a local reputation to protect. There is nothing anyone on the internet on the other side of the country can offer that you can’t get down the street. More often than not, it is just the opposite… Especially when it comes to down payment assistance programs for first time buyers. These programs are always only available from the local lender.
We lend for homes in MN, WI, and SD and would love to assist you
Minnesota First-Time Home Buyer Tips
Minneapolis, MN: Being a first time home buyer, and buying your first home is an exciting time. There is no reason to be worried, and here are a few tips to help guide the way.
Find a lender – Get Pre Approved for a Mortgage Loan.
Unless you are paying cash, you are going to need a loan. Finding and choosing the best loan and lender to handle the loan for you should not be taken lightly. Randomly taking to whoever answers the phone at 1-800 Big Bank, or thinking you can get a mortgage in 10 minutes via your cell phone are generally huge mistakes.
Read my whole separate article on Shopping For a Lender
Once you find your Loan Officer, they will review various programs with you, go over your maximum purchase price, payment comfort level, and any other requirements. Expect to send in a minimum of your Photo ID, last 30-days of paystubs, last two-months bank statements, last two-years W2’s, and at least your last filed Federal tax return.
With a mortgage pre-approval in hand, you can meet with the Real Estate Agent, and know exactly how much house you can afford to buy, so you are not wasting time looking at homes outside of your price range.
Find a Realtor.
As with picking a Loan Officer, picking a Real Estate Agent also should not be taken lightly. As a Loan Officer, my tips for selecting an agent are:
Once you’ve selected your agent, they assist you in finding your dream house, negotiating a great offer, walking you through the paperwork, and helping with things like inspections.
TIP: Did you know that the buyers do not pay anything out-of-pocket for the working with an agent to buy a home. The cost of your agent is paid for by the seller.
Make a Home Wants and Needs Wish List.
Make a list of what you absolutely must have in your new home. Number of bedrooms, school district, etc., and let your Real Estate Agent know. Then also decide on things you can be flexible on. Unless you are building a custom home, no house will be a perfect fit.
Looking At Homes.
Typically your agent will set you up on automated email listing of new homes that fit your criteria. Especially in the under $300,000 price point, you should look at those emails daily, and if you see something you like, you need to be prepared to drop everything, and go immediately look at the house. Waiting for the weekend or a day off, and you may have been just beaten out by someone else.
As you look at homes, you may find your wants/needs list can change. Be sure to pass that along to your agent.
Ready to get started?
It’s easy. Simply complete the Online application. You’ll be applying directly with me, Joe Metzler, an experienced, multiple award winning Loan officer with over 20-years in the the business. We lend in MN, WI, and SD. Learn more about me HERE.
Minneapolis, MN: One of the biggest true hurdles to home ownership is a lack of down payment money. Sadly, many people don’t even apply for a home loan, because they think you need a much bigger down payment than you actually may.
But, if you have at least $1,000 of your own money, OK or better credit (640 score or higher), you may be able to buy your own home using our first time home buyer programs with down payment assistance.
Other low down payment options include:
If you are in MN, WI, SD, or FL – Simply complete the secure online application at www.FirstTimeHomeBuyer-MN.com in about 10 minutes time. A fully licensed and experienced Loan Officer will review your loan application, then go over the various program to see what programs you qualify for, how much house you can buy, what the payments might look like, and finally, how much cash you may, or may not need to put it all together.
If you are in other states, simply find a LOCAL mortgage broker, and apply with them.
You have nothing to lose in applying, and everything to gain in owning your own home!
Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Mortgages Unlimited. He was named the 2014 Minnesota Loan Officer of the Year, and Top 300 Loan Officers in the Nation for 2010, 2015, 2016.
To finance with a home with Joe and Mortgages Unlimited, your local preferred lender for Minnesota, Wisconsin, and South Dakota, simply call (651) 552-3681 or APPLY ONLINE. NMLS 274132. Equal Housing Lender. Not everyone will qualify. See web site for more details. Not an offer to enter into an interest rate lock agreement.
Home buyers, especially first time home buyers, commonly fail to understand all the costs involved in buying a home. Everyone understands down payment, so no issues there. But mortgage loan closing costs are a whole different story.
I often hear potential home buyer comment that they thought they had saved enough for a down payment, only to be blind sided with mortgage loan closing costs.
All mortgage loans have closing costs. They include appraisal, credit report, state taxes, title company fees, loan origination fees, state deed taxes, and more. You also have what is known as pre-paid items, which include pro-rated property taxes on the house you are buying, and paying for the first years home owners insurance up-front.
Actual closing costs and pre-paid items can easily range from about 2% to 8% of the sale price of a home, depending on where you live, and the purchase price of the home.
Your Loan Officer will provide you with a detailed estimate of these closing costs based on the actual home once you pick it out, and can give you a good ballpark number during your initial loan review.
TIP: Anyone telling you closing costs are always a certain percentage is flat out simply wrong.
Yes, closing costs can really add up. If you were planning on a 10% down payment, this means you really need 12% to 18% of the purchase price of the home. Yikes.
The good news is, the mortgage industry understands this, and allows you to pay closing costs multiple ways.
Option 1) Pay cash out of pocket. Always the best move, but incredibly burdensome for most home buyer.
Option 2) Seller paid closing costs. You simply ask the seller to pay your closing costs for you when making your offer. Depending on the loan program you are using, the seller can pay between 2% and 6% of the purchase price in closing costs on your behalf. While this sounds free, because the ‘seller’ is paying them for you, the reality is the seller isn’t paying anything. Rather, this is a method of you rolling the closing costs into the loan itself.
For example, the seller is asking $200,000 for the home. You offer $200,000 – but also ask the seller to pay $6,000 of your closing costs. If the seller agrees, many people think they just got free money. The reality is the seller has accepted $194,000 in their pocket. So you could have bought the house for $194,000, and paid your own closing costs. Instead you are buying the house for $200,000, and paying closing costs over time, versus out-of-pocket today.
It is a little more obvious to buyers that they are paying over time, when the same seller who wanted $200,000 refuses to budge, but you need closing costs rolled in to lessen your out-of-pocket burden. In this case, you’d restructure your offer to $206,000, and have the seller pay the $6,000 of closing costs. The seller gets what they wanted, and you rolled closing costs into the loan, again paying over time instead of out-of-pocket today.
Option 3) Lender Paid Closing Costs (also known as Lender Credits). Under this option, the lender will reduce your actual real closing costs by increasing your interest rate. You can choose to increase your interest rate a tiny amount, for a tiny reduction in closing costs, all the way to completely eliminating all of your closing costs with a much higher interest rate.
This isn’t a good or bad option, rather it is a depends option. How much reduction do you need? Do you have all the closing costs money today? How much higher will the payment be? How long will you live in the home?
TIP: ALL LENDERS HAVE ESSENTIALLY THE SAME TRUE CLOSING COSTS. When shopping lenders, many people will receive a closing cost quote lower than someone else, giving the illusion of a better deal. Many banks and lenders claims things like they give free appraisals, or never charge loan origination fees. No closing cost loans were all the rage a few years ago.
Little do many people realize that all these lenders are doing is increasing your loans interest rate to cover these items, but not telling you they are doing it. They don’t work for free, and someone has to pay the appraiser. This lower closing cost ploy makes unsuspecting home buyers potentially pick a lender based on a perceived better deal, when in fact, it isn’t. You pay, you always pay. How do you choose to pay? Lower rate = higher costs. Higher costs = lower rates.
Option 4) Any Combination. This is actually the most common way people pay closing costs. Many ask the seller to pay some, maybe increase the rate 1/8 or 1/4% to pay some, and maybe a little bit out-of-pocket to pay the rest.
It is very common for many home buyers through these options, to completely eliminate closing costs as an out-of-pocket expense, leaving them with just needing their down payment to buy the house.
So don’t ever let the fear of closing costs keep you from buying your dream home.
There has been a lot of talk that millennials are not buying homes. Is this true or myth?
First, while the purchase numbers for millennials are down, millions of people buy homes every year, including millennials.
Most of the talk about millennials centers around the inability to purchase a home because of student loan debt. Studies after study does show that tuition costs are up, and that student loan debt has roughly doubled in the past 10-years. There is also a noticeable decline in homeownership rates among millennials the past decade.
Too much debt reduces the maximum amount of home lenders will allow someone to purchase. This is known as debt-to-income ratios. Less that 30% of your income spend on just the home is considered as a safe house payment, while under 45% of income should be spent on the house, plus car loans, credit cards, student loans, etc.
Estimates suggest that around 35% of the decline in homeownership in the past 10-years is simply due to student loan debt. That leaves whopping 65% to other factors.
Assuming these numbers are accurate, and many suggest the student loan blame is not nearly as high as believed, I as an actual Mortgage Loan Officer, can attest that yes, student loan debt is a factor in some cases. But I see many other factors on a daily basis, the biggest being simply a low desire to own. This primarily resulting from observing their parents, friends, neighbors, and relatives suffer through the housing bust that started in 2007.
Other items I see include very poor credit, and a lack of knowledge on how credit and credit score work. Lack of down payment, and a lack of willingness to purchase a starter home. Many of the millennials believe they should jump right into a big, beautiful, white picket fence dream home as their first home.
I, like many people started with an old small home, in a not so perfect neighborhood. As I got older, got married, and increased our family income, I moved up into bigger and nicer homes, until now currently being in my existing “big beautiful home” for 19-years.
The me me me, now now now, pay for it later attitude really crept into society over the past 20-years. Having champagne taste for homes on a beer budget has held back more potential first time buyers from purchasing a home than most other items I see everyday. They simply refuse to buy a starter home.
Granted, a starter home today tends to have a heftier price then years back. As a percentage of income, low end starter homes suck up more of the owners paycheck than ever before. This too has a huge effect on first time home buyers, regardless if they have a college degree, and student loan debt or not.
Another major issue I see is simply poor credit. As the days go by, it would appear to me that the population has become dumber and dumber about simple concepts, like paying your bills on time. It is very common for me to see potential home buyers in the 25 to 30-year old range have horrible credit. Then when they realize the poor credit prevents them from buying a home, it may take them a few years to improve their credit.
The New York Fed recently reported that an estimated 360,000 people would have bought a in 2015 had tuition costs remained the same as they were in 2001. There is no doubt student loan debt has been a factor.
As an actual Loan Officer, active in the business currently, and having been so for more than 20-years, I am simply saying there are a multitude of reasons why people don’t buy homes.
The constant banter of it being student loan debt preventing ownership is heard by potential home buyers who have student loan debt. Many clients I speak to start out the conversation saying the don’t think they can buy a home because of student loan debt, and are very pleasantly surprised when I issue them a Pre-Approval Letter.
Of course every person and every situation is different.
If you want to buy a home, regardless of age, income, or student loan debt. DO NOT ASSUME. Contact a local mortgage broker in your area (I lend in MN, WI, and SD). Give them a full mortgage loan application so they can zero in on your individual situation. You too may be pleasantly surprised, and enjoying the benefits of home ownership next month.
Minneapolis, MN: Face it, The super low mortgage interest rates are gone. Higher mortgage rates are here already, and it is very unlikely we will see them go back down anytime soon. Rather, it is anticipated that we should see 30-yr fixed rates into the mid 5% range by the middle of 2018.
As interest rates creep up, your buying power, or the maximum house price you can afford, goes down. As a ballpark quick way to think about it, every rate increase of 1% will lower the maximum house price by 10%.
A $225,000 loan at 3.75% is $1042 a month on a 30-yr fixed, while the same $225,000 loan at 4.50% is $1140, or $98.00 more per month. Another way of looking at it, is you would have to get a $206,000 loan to equal the same payment as the 3.75% rate on a $225,000 loan.
While neither of these should be deal killers for anyone looking to buy a home, it clearly has an effect on buying power, especially for First Time Home Buyers. So don’t delay, buy a home now while before anymore Fed rate hikes eat into your buying power.
For loans in MN, WI, and SD, contact us today to discuss home financing options, or just get started with a quick, no obligation online loan application.
Minneapolis, MN: Just 10-years ago, 30-year fixed rates were 6.125%, and the real estate market was hot. With rising interest rates, 2017 may be a bit more challenging for home buyers. But the biggest challenge for most people who wish to buy a home is down payment.
You do not need 20% down payment to buy a home! I repeat, you do not need 20%. This large down payment myth has been around forever, but it simply isn’t true for the vast majority of people buying their first primary residence. There are many program that allow for no down payment, or low down payment. Some jumbo loans buyers (loans over $424,100 in most parts of the county), as will people buying investment properties will usually need a large down payment. But for the rest of us, there are many low down payment, no down payment loan options for 2017.
The term first time home buyer program covers a wide net of potential programs and options. To be a first time home buyer, you simply must not have owned a home in the past three-years. If you owned a home in the past, but it has been longer than three-years, you are a first time home buyer again. Some options allow for lower rates, cheaper mortgage insurance, and even down payment assistance. Most come with additional strings attached, like household income requirements, lower debt to income requirements, and that you must take first time home buyer education classes.
FHA backed loans are very popular, and only require a small 3.50% down payment. The down payment can be your own money (checking/savings/retirement), a gift from a family member, or can come from a down payment assistance program. FHA loans are more forgiving than other loans, for example allowing just a two-year waiting period if you have a previous bankruptcy, and a three-year waiting period after a previous foreclosure. Maximum loan limits apply based on the medium income of the county the property will be located. Check FHA Loan Limits
Both Fannie Mae and Freddie Mac offer a 3% down payment program. The down payment can be your own money (checking/savings/retirement), or a gift from a family member. This is a great program, especially for those with higher credit scores, or homes that need a little TLC that might not pass FHA loan inspections.
Fannie Mae offers an additional 3% down loan called HomeReady for first time home buyers. You need to take a home buyer education class, but you’ll be rewarded with lower interest rates, and lower mortgage insurance than the standard 3% down conventional loan.
Both Fannie Mae and Freddie Mac offer a basic 5% down payment program. This is your everyday, plain vanilla mortgage loan available to everyone.
Available for active or retired U.S. Military personal, the VA loan is truly one of the best benefits this country offers for your service. The VA loan is a no down payment program, and also has no mortgage insurance whatsoever. This is a huge savings per month over any other low or no down payment loan. Closing costs can be rolled into the loan, making for a home purchase, that for most people, is about as close to zero money out of pocket to buy a home as you’ll ever get.
Available to those wishing to buy in more rural areas of the country, the USDA Rural Development loan does not require a down payment. While the loan does have mortgage insurance, the cost is very low compared to other loans. You need to meet household income, and property location requirements.
Down payment assistance comes in many different flavors from neighbors, city, county, and even state programs. Generally these are in the form of a loan that needs to eventually be paid back, but there are a very small number that are actually forgiven if you live in the home a set period (like 9-years or longer). The assistance loan can be combined with a standard loan, like an FHA loan, to be used for down payment. Household income, and property location are common requirements.
If want to own your own home, you have OK or better credit, a stable income, and at least a little money in the bank, by all means, you should apply for a home loan. Your Loan Officer will review your loan application, then go over the various program to see what programs you qualify for, how much house you can buy, what the payments might look like, and finally, how much cash you may, or may not need to put it all together.
Best case, you’ll be in your own home sooner than you thought. Worse case, your Loan Officer will go over what you need to do to be in position to buy a home in the near future. Either way, a win win for you.
Minneapolis, Minnesota: Face it, for most people, the biggest obstacle to buying a home is a lack of down payment. Here are 5 low down payment home loan options to help you get into your own home.
The City of Minneapolis, in partnership with Minnesota Housing, the Minnesota Homeownership Center, and Mortgage lenders like us here at Mortgages Unlimited are getting together to provide access to down payment assistance, quality, affordable mortgages and free, non-biased housing experts that can help you become a successful home owner!
Maybe you’ve thought homeownership wasn’t possible, or you didn’t know where to start. Maybe you thought your credit wasn’t good enough or you haven’t saved enough for a down payment. We can help!
Down Payment Assistance – Homeownership Opportunity Minneapolis
The City of Minneapolis wants to make affordable homeownership a reality for you. The City is providing up to $7,500 to qualified buyers to cover down payment and closing costs when purchasing a home anywhere within Minneapolis city limits. To qualify for this program, you must meet the following income eligibility requirements:
Quality, Affordable Mortgages
Minnesota Housing, the State’s Housing Finance Agency, offers mortgage loans for first-time homebuyers with affordable interest rates. Our Minnesota Housing loans work seamlessly with down payment assistance products like those offered by the City of Minneapolis.
How To Get Started
Your first step is to apply for the mortgage loan itself. Your Mortgages Unlimited Loan Officer will review the application, your credit, etc. They will discuss with you if you qualify, how much house you can afford, what the payments might look like, and what assistance you may qualify to receive. Click HERE to apply online (easiest) or call (651) 552-3681.
If that all looks good, you will need to submit standard loan documentation, which includes photo id, last two pay stubs, last two bank statements, and the last three years of W2’s and federal tax returns.
If that still looks good, you will be issued a Pre-Approval Letter, put in touch with a high quality Real estate Agent agent, and sent out to find your dream home.
In between the initial approval and closing on your new home, you will need to take the homebuyer education class listed next.
You do not have to have perfect credit, but you can NOT have BAD credit. All applicants must have a middle credit score of at least 640. Next, while you are receiving assistance, you can’t buy a home with no money. You must have at least $1,000 of your own money to put into buying the home.
If you are a first time home buyer, this program from the City of Minneapolis, just like all first time home buyer programs requires all first time homebuyers to attend home buyer education.
There are two options: Attend a physical 8-hour class (Home Stretch) or take an online class (Framework Classes). Click the links below for more information of the required training.
Sign up for HOME STRETCH: In-person workshop Your first time homebuyer class can be taken in person in multiple locations throughout the state. The cost of this class is typically $25.
Sign up for FRAMEWORK: Online Education An online homebuyer education class can be started and stopped, and finished at your leisure. The cost of this training is $75. Most people take the online training.
When Your Class Is Completed: Print your Certificate of Completion and give a copy to your Loan Officer
Joe Metzler, Senior Loan Officer. NMLS 274132
Minneapolis, MN: As mortgage rates continue to hover near the all-time historic low rates that we saw last November (2012), the nation’s overall economic outlook has seemed to improve.
In November 2012, rates fell down to levels that had not been seen since 1971. While current rates are not at all-time lows, they are just slightly above those rates, and at levels that have not been seen since January.
The low mortgage rates are helping to stimulate the recovery of the housing market. They low rates have helped to increase home sales and home refinances. Many current homeowners have taken advantage of the low rates by refinancing their home loans, freeing up money to be spent elsewhere.
While the Federal Reserve plans to continue to keep mortgage rates low through the purchase of mortgage-backed security bonds, mortgage rates are not likely to stay this low forever. CNN Money expects that as the economy continues to improve over the course of the year, mortgage rates will begin to rise this fall – but just slightly.
Taking advantage of mortgage rates while they remain low is essential. First time home buyers can afford to purchase a property that is on average 20 percent more expensive than they were when mortgage rates were in the 4-5 percentile range. Refinancing to shorter term can also help buyers pay off their home in less time and lower their monthly mortgage payments.
Credit tips for buying a home
We all should know that it’s important to have solid good credit when thinking about buying your first home. We all know that lenders and banks want to see solid credit in any borrower.
But what exactly does that mean for first time home buyers?
It means having some credit. It means having a score in the mid-to-upper 600 range (although that doesn’t mean you’re out in the cold if you’re in the low 600’s). It means no major negative items like a repo or bankruptcy in the past few years.
In short, it means you’re responsible with your money, and you pay your bills on time. The way lender determine if you are doing these things is with a FICO credit score.
How do you make sure your credit is good in general? Let’s explore 6 credit tips for first time home buyers that you could follow even if you’re not a first time buyer.
You can explore more on how to get your credit ready to become a first time home buyer with reading “The Understanding Your FICO Score” at the button below. The Pamphlet covers what makes up a credit score, how to improve your FICO score, steps to rebuilding credit and more.
With millions of web sites to look at for home for sale listing, it is becoming more and more common for people to feel they don’t need the help of a licensed Real Estate Agent.
More specifically, people seem to ONLY be calling listing agents for the properties you want to see. The thought behind this I suppose is “I can get a better deal if I don’t involve another agent and contact the listing agent directly.”
While the listing agent loves you only calling them, here is why is is usually a costly mistake for home buyers.
Myth # 1- I will get a better deal if I call the listing agent directly.
That listing agent is contractually bound to do what is in the best interest of the seller, and that means getting the highest dollar amount for the sale of the home. NEVER disclose your top dollar or financial ability to get a bigger mortgage loan to them because by law they have to go back to the seller with this information.
Remember…your goal is to pay as little as possible, while the seller’s agent’s goal is to get as much as possible for the seller. No matter what a Real Estate agent claims, this is a clear conflict of interest.
Myth # 2- I can find more homes for sale by calling more than one agent, or looking at multiple web sites.
The days of each real estate office having big books of only their companies listing are long gone. It is mutually beneficial for all Real Estate Agents to have all properties in the same database (call the MLS – or Multiple Listing Service)
All Real Estate Agents in the same area therefore pull the same list of homes available for sale from the same multiple listing service database. Local agent sites typically interface with the local MLS site a minimum of once per day. If a new house for sale gets added today, EVERYONE local should have it listed tomorrow.
If you saw a home on Zillow, or some other national site, but that particular home didn’t come up in the local agent’s site, remember sites like Zillow & Trulia are NOT updated as often as the local MLS database real estate agents can pull from are. If it is not on the local MLS… chances are the house that you saw has already been sold or is already under contract.
More importantly, the opposite is more often true. You find a home on a local real estate web site but NOT on the national sites. This is because some local companies do NOT report to the national systems. In my area (Minneapolis / St Paul, MN), the biggest player in the market (Edina Realty) recently stated they will no longer let their listing be show on the big national sites. This means if you are looking at home for sale here, but on a national site versus a local site, you a NOT seeing over 20% of this areas listing!
The bottom line is the smart move for home buyers, and especially first time home buyers in MN and WI, is to use the services of a good, licensed local real estate agent in any home purchase transaction, and save yourself a lot of time by only looking at one LOCAL REALTOR web site.
Looking for a good Real Estate Agent in Woodbury MN area? I suggest Katie Draz.