First Time Home Buyer Class in MN

MN First Time Home Buyer Classes

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.

Free good faith estimate

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.

Minnesota Only

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.


Why do mortgage lenders need your bank statements?

Why do mortgage lenders need your bank statements?

Minneapolis St Paul, MN: When taking out the largest loan most people will ever have in their life, a home loan, your Mortgage Loan Officer is going to ask a lot of questions, and request a lot of supporting documents, like pay stubs, W2’s, tax returns, and your recent bank statements.

Providing all this documentation really should be pretty easy for most people, yet it also causes a lot of frustration. Most people don’t get pay checks handed to them anymore, just as many people don’t get banks statements mailed to the home either. So here starts some of the annoyance issues right away for some people, while others quickly and easily access the documents online.

Your lender wants actual pay stubs, and actual bank statements, like what would be mailed to the home. Many people send simple screen shots, which simply doesn’t work. Most online accounts let you print real statements and real pay stubs, you just need to look around to find them.

Generally, most mortgage loan programs only require your two most recent bank statements. We also need ALL the statements pages too. If the statement says “Page 1 of 3”, and the last page is just advertising, we still need it.

Underwriters are also looking for lots of other things in your bank statements too, including:

Cash-to-Close

When the mortgage company looks at your bank statements, the most obvious thing they are looking for is do you have the money in the bank to cover your down payment and closing costs, also known as ‘cash-to-close.” Do you have it all today?  What is your average balances?

If your last two months bank statements show $500 balances, but you need $10,000 for down payment, where is it coming from?

Non-Payroll Deposits

Any large, obviously non-payroll deposit needs to be documented. What is it, where did it come from?  Is is a loan that needs to be paid back? Is it a gift? Is it your tax refund?

Large deposits is one of the biggest headaches for both the lender and the applicant, and depending on the answer, can be no big deal, require a little bit of paperwork to prove where it came from, or can actually be a deal killer.

A common problem is many people have large sums of cash at home, then deposit in the bank. As weird as it sound, that cash deposit is NOT an acceptable source of money for your down payment, and needs to be in the bank account at least 60-days before it can be considered usable money for your down payment.

So what is a large deposit?

Most lenders consider a large deposit any non-payroll deposit that is more than 50% of a applicant(s) monthly income for conventional loans, and more that 1% of the purchase price of the home for an FHA loan.

Bouncing Checks?

Yes, we care if you are bouncing checks. It shows how you manage money.

Let’s say your current rent is $1,000 a month, and you consistently bounce checks. Your potential new house payment is $1,400 a month. You can’t manage your account with rent at $1,000 a month, how are you going to be able to handle a $400 increase in your housing costs?

Undisclosed Debt

On the loan application, you are supposed to disclose all recurring debt. The reality is mortgage lenders generally just merge in the debt showing on your credit report. But a sharp eyed Underwriter may catch something on the bank statement and ask a question.

What DON”T we care about?

We don’t care about ATM withdrawals at the casino, and we don’t care about your purchase at the liquor store or Victoria’s Secret. We pretty much don’t care anything about your purchases.

Busy Bank Statements

Busy bank statements is my personal term for people who transfer around money from their various multiple accounts on a regular basis.  This can lead to a lot of headaches in documentation.  I just had a client, where on her bank statement, there was a large deposit. When I asked her where it came from, she said her savings account. Great, now send me the savings account statement.  Once I saw the savings account, there was a large deposit there too. She said that deposit was from a 401k loan.  OK, prove that too.

While she was able to prove and document everything, she also became very annoyed.  I understand, but those are the rules. So if you know you will be buying a home in the next few months, it may be easier to put all the money in one account now to avoid any potential issues with Underwriting.


Spring real estate has sprung

Spring brings renewed real estate activity to Minneapolis / St Paul

Spring 2016 has seen a welcome2_FTHB_1nice increase in real estate activity in the Twin Cities, MN area, with pending sales rising 12.6% compared to March 2015, and with the median sales price rising to $222,000, a nice 5.7% increase. Buyers signed 5,861 new purchase agreements.

Supply on the market remains a concern, area Realtor associations reported Thursday, with new listings rising only 0.5 percent, keeping supply levels at a 13-year low. Compared with last March, inventory levels fell 20.6 percent to 11,893 active properties.

Low inventory levels, at about a 10-year low is causing increased values, and multiple offers over asking price just days on the market for many homes for homes under $250,000.  As the home price goes up, it typically take longer for the homes to sell.

Mortgage lenders saw a large jump in mortgage loan pre-approval activity in February, which brings anecdotal evidence that there would be a surge of buyers this spring.


Minneapolis St Paul Home Values Continue to Rise

Minneapolis St Paul area home values continue to rise

Twin Cities area median home prices continue their creep upward, increasing 4.9 percent compared with October of last year.
images999888

Housing inventory declined 25.6 percent, to a 3.2-month supply. Generally, five to six months is considered balanced. While the bulk of the metro as a whole is favoring sellers, not all areas, segments and price points reflect that.

The median list price in the metro rose 4.4 percent to $240,000, while average price per square foot rose 3.2 percent to $127, according to The Minneapolis Area Association of Realtors.

Less foreclosures, less homes underwater, less homes on the market, and attractive mortgage interest rates have all combined to push home values nicely higher

  The October median sales price was $218,000 according The St. Paul Realtor Association.


Twin Cities real estate market hits 10-yr high

Minneapolis, MN: The Minneapolis, St Paul area real estate market reached a 10-year milestones in June 2015, with signed purchase agreements rising 19.2 percent to 6,266. Last year, closed sales had increased 22% to 6,928.

Real Estate, Minnesota, Minneapolis, for sale, mortgage rates, interest rates
Get Pre-Approved Today – Click HERE to Apply Online

This is all welcome news, because the last time demand was this strong was back in June 2005, according to a release Monday from the Minneapolis Area Association of Realtors.

The June 2015 median sales price climbed 4.7% to $229,900. This puts the AVERAGE home price to within just 3.5% of the record high set back in June 2006, which was at a then record median high of $238,000. Typical price per square foot, now at $128, is about 18.5 percent below its June 2006 record high.

The local real estate market continues to be a sellers market, because of the ongoing imbalance between the supply of homes for sale, and the number of active buyers looking to buy a home.

Sellers are getting on average about 99.6% of their last list price, with large numbers of homes selling within days, with multiple offers, and over list price.

For buyers, this means you need to be fully mortgage lender pre-approved, with pre-approval letter in hand, and ready to make an offer immediately on anything you love.

 MN first time home buyer programs


Top 100 Loan Officer 2015

Mortgages Unlimited’s Loan Officer Joe Metzler, out of their St. Paul, MN Office, has been recognized as one of the Top 100 Loan Officers in the Nation by Origination News, coming in at number 98. Read the list at http://tinyurl.com/ljqqkbj

Top Loan Officers 2015This is another is an ongoing set of accomplishments for Mr. Metzler, as he was also recently named the Minnesota Mortgage Associations 2014 Loan Officer of the Year.  Joe Metzler has been a top producing Loan Officer for Mortgages Unlimited since 2000, and has over 20-years industry experience.  Joe has received other awards in recent years in recognition of his outstanding service and dedication to the mortgage industry, including:
  • 2011 – Top 40 Most Influential Mortgage Professions to Watch (NMPM)
  • 2010 – Top 150 Loan Officers in the Nation by Dollar Volume (Origination News)

Joe Metzler is a certified MMS (Minnesota Mortgage Specialist). Less than 1% of Mortgage Loan Officers in Minnesota have completed the requirements to earn this designation. This is just one of many ways that shows Joe’s dedication to his career.  His track record is exceptional by any standard. He believes in doing the job right the first time and providing a service you can depend on.

If you’d like to have Joe as your Loan Officer, he is licensed in MN, WI, and SD. He can be reached at (651) 552-3681, or you can apply on his web site


Think you know your credit score? You are wrong!

Minneapolis / St Paul, MN:  These days, everyone seems to know their “credit score”.  Many people subscribe to one or all  3 credit services, or get a score from a place like CreditKarma.com.

Before you get too excited about that credit score, understand that the score numbers you just received most likely was based on the “Advantage Score” model. While that IS a credit score, that is NOT the same scoring model mortgage companies use.

Mortgage Credit Score
Mortgage Credit Score

There are many different ‘types’ of credit scores.

Mortgage lenders care about how you handle mortgages, credit card companies care about how you handle credit cards. The reports these industries pull tend to be weighted towards their industry.  The Advantage score you get when you look at your score, or from your credit card statement simply is NOT the same scoring model lenders use.

Another way to look at is is think about buying a car. You tell someone you bought a new Ford. Great, but what model Ford? Did you get a Ford Focus, or was in a new Ford Truck?

Getting your credit score somewhere?? Great, what scoring model is is based on? They are generally all FICO scores, but what scoring model is it based on?? Advantage score, Beacon Score?   Typically the Advantage Score is noticeably higher than your mortgage score.

If the credit score you are looking at is from a mortgage company, then that should be accurate if any other mortgage company pulls your credit…  Or at least until something changes, and credit scores can potentially change everyday.  I’ll save that for another article…

Ultimately, the ONLY credit score that matters is the credit score your Loan Officer obtains on the day you start your mortgage application!

For most people, the score you see and get on your own, or through your credit card statement are close, and give you a ballpark idea of your lender score, but don’t be surprised when we tell you a different number.


Down Payment Assistance Programs in MN

DOWN PAYMENT ASSISTANCE PROGRAMS

MHFA Start Up and Step Up down payment assistance programs in MN for First Time Home Buyers

Have $1,000?  Have OK Credit?  Than YOU can be a homeowner.

down payment assistance programs mnThe biggest hurdle for many first time home buyers is the lack of down payment money.  With the down payment assistance programs from the Minnesota Housing Finance Agency – you can buy a new home today, and be enjoying it next month!

TWO MINNESOTA DOWN PAYMENT ASSISTANCE PROGRAMS

START UP Program

The Start Up assistance program is for people who have NOT owned a home in the last three years.

STEP UP Program

The Step Up program is for people who currently do, or may have owned a home previously.  Both of these program assist with up to $10,000 is down payment assistance to those who qualify.  Most people get much less. Typically up to just $5,000.

MORTGAGE CREDIT CERTIFICATES

By adding a Mortgage Credit Certificate option, first time home buyers can potentially save up to an addition $2,000 on their taxes.

Click or call to learn more about the benefits of mortgage credit certificates in MN (MCC)

 WHO QUALIFIES FOR DOWN PAYMENT ASSISTANCE?

As with any assistance program, there are additional rules and guidelines that need to be followed.  Here is a basic list of requirements:

  • Credit score above 640 (middle score of all applicants)
  • Attend Home Buyer Education Class or take the online class
  • Meet family Income Limits
  • Buy an affordable home
  • Provide previous three years tax returns
  • Meet FHA, VA, USDA, or Fannie Mae / Freddie Mac underlying loan guidelines

The rules and guidelines for first time home buyer and down payment assistance programs in MN are a bit overwhelming for most potential new home owners.  We suggest you don’t try to figure it out yourself…  Rather, simply call us at (651) 552-3681, or fill out a full online application. Our licensed professional Loan Officers will review the application, zero in on the best loan for you, then contact you to discuss your options, all with NO COST and NO obligations whatsoever.

Click here For FULL RULES and GUIDELINES on the Minnesota Housing Finance Agency Down Payment Assistance Programs


Refinancing activity down 55% – Rates still awesome

Mortgages Rates in Minneapolis, MNAccording to recent surveys from the Mortgage Bankers Association, refinance applications are down 55% from recent highs. The latest survey shows the smallest amount of refinance activity in years, yet refinances still account for 63 percent of all mortgage applications.

Clearly the uptick in interest rates from the lows we say back in May 2013 are having an effect on activity. As mortgage rates move higher, refinancing makes less sense for more and more people.  Current best execution on 30-year fixed mortgage rates is running +/- 4.50%, which is about 1% higher than the recent lows.

From a historical perspective, interest rates are still fantastic, and surveys show there are still millions of people who could benefit be refinancing to today’s current interest rates.

HARP Refinance MNThere is also a huge mental aspect to refinancing. When people “hear” rates have gone up, many don’t even both to check with their local mortgage professional to run numbers.   But interest rates are only one aspect of refinancing.  Getting a short term, like a 15-year mortgage, can easily save many people well in excess of $100,000 or more.  That is nothing to ignore.   For others, refinancing back to a new 30-year fixed mortgage could save them hundreds of dollars a month.

Finally, many people still are under the belief that that can not refinance because of underwriting rules, or because their home has lost value.  But programs like HARP 2, the Home Affordable refinance Program for underwater home are working well for millions of people.

My advice is to never assume.  Call your local licensed mortgage professional for a quick review.  You may be surprised at what you hear!

 


How many homes should we look at before buying?

You are fully pre-approved with your mortgage lender, and out looking at new homes.

How many homes should we look at before buying?

Minneapolis, MN Real Estate - Mortgage BrokerReal Estate Agents and lenders get this question all the time. The answer? It depends.

Realistically, most people only physically need to look at between 5 – 7 homes before deciding on which one to make an offer on. Some look at 1 or 2 homes before making and offer, and some look at 20 plus homes. The trick is to work with your Real Estate Agent and Loan Officer to have realistic expectations of your wants, needs, goals, and affordability.

The first step is to get pre-approved with a local Minneapolis area mortgage broker.

This way you’ve already discussed mortgage loan programs, down payment and loan requirements, and have set a realistic home purchase price. How can you even start looking at homes if you don’t know this information?

Meet with the Real Estate Agent

With mortgage knowledge in hand, now you can meet with a local Realtor to go over your housing needs, Bedrooms, neighborhoods, yards, features, priorities, and more. Your agent will discuss all of these items, and figure out a realistic plan. Usually they will then set up some automated listings to be sent to you by Email that meets your criteria. When you find some that you like, now it is time to physically go look at homes.

Because you’ve already discuss financing, and set good expectations with your Realtor, you can usually achieve the dream of home ownership without looking at dozens of homes. It’s all about educating them up front and getting on the same page.

First Time Home Buyers

Many first time home buyers in the Minneapolis, MN area look at a little high average, more like 7 – 10 homes before buying. This is OK, as they sometimes need to discover features and options on homes that they may have not been as familiar with as a move up buying looking at their second or third home.

The Bottom Line is that there is no set number

Each person is different. But if you’ve physically looked at more than 10 homes, it is probably time to sit down with your mortgage and real estate professional to re-examine your housing wants, needs, goals, and affordability.before they find the right home.


Three Great Reasons to Buy A House Today

real1Thinking about buying a new home, but maybe still sitting on the fence? Here are three great reasons to buy a home today:

1. Home Prices Rising:  The Minneapolis, St Paul market, home prices have risen 15.1% in the last 12 months. The bottom of the market has come and gone. But there is a lot of room for upward movement. If prices continue to rise, and you buy now, your equity will begin to build as soon as you close.

2. Builders Are Building Again: Land costs more, materials cost more, labor costs more. This means new home prices are going up, too. Buying today may be your best option because the cost of new constructions isn’t likely to decrease.

3. Mortgage Interest Rates Still Historically Low: Interest rates are up from a few months ago, but still in the mid 4% range (as of today). This is still considered fantastically low. Mortgage interest rates are projected to be in the mid 5% range next summer, so buying today and locking in a super low rate is a smart move.


St Paul Home Price continue to climb

Minneapolis and St Paul area home owners continue to see an upward climb in the value of their homes. The median sales price soared up 17.5 percent over last year.  According to the Minneapolis Area Association of REALTORS®, the June 2013 average value was $210,000, the highest it’s been since December 2007, just as the market was starting to crash.  By the way, mortgage interest rates at the time were about 6.10%.

house_from_wordLess homes for sale than what we’d like to see, combined with fewer foreclosures, and low mortgage rates continue to fuel these price increases.  New listings were up in June by over 20% from last year, but still there are more buyers than sellers,  sparking competition amongst buyers.

While mortgage interest rates are still historically low, they have increased about 1% from the lows back in May 2013 to around 4.50% today. This increase has put more pressure on the home prices as those who were sitting on the fence are jumping into the water before rates go even higher.

In the sub $250,000 price range, considered the “most affordable”, many homes are selling very quickly with multiple offers just days on the market.  Therefore all prospective buyers need to be fully lender pre-approved and ready to make an offer the moment they see a house they love.

Rising home prices and higher mortgage rates caused housing affordability to decrease by 15.9 percent from last year. However, home prices remain well below pre-housing-crisis levels and mortgage rates remain historically low, even after the rate increase.

 


HARP Refinance still going strong in MN and WI

The Federal Housing Finance Agency (FHFA) special underwater refinance program, commonly known as HARP (Home Affordable Refinance Program) is still going strong.

HARP refinance in MNWhile mortgage rates have risen a bit, there are still millions of people who could take advantage of the program to save significant money on their monthly mortgage payments.  Because of this, the FHFA had Fannie Mae and Freddie Mac extend the HARP program by two years to December 31, 2015. The program was originally set to expire December 31, 2013.
More than 2.2 million homeowners have already refinanced through HARP since HARP was introduced by FHFA and the U.S. Department of the Treasury in April 2009.  HARP is uniquely designed to allow borrowers who owe more than their home is worth the opportunity to refinance their mortgage.Extending the program will continue to provide borrowers opportunities to refinance, give clear guidance to lenders and reduce risk for Fannie Mae, Freddie Mac and taxpayers.
In addition, FHFA will soon launch a nationwide campaign to inform homeowners about HARP. This campaign will educate consumers about HARP and its eligibility requirements and motivate them to explore their options and utilize HARP before the program ends.

To be eligible for a HARP refinance homeowners must meet the following criteria:

  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80 percent.
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one
  • late payment in the last 12 months.

Check here to see if your loan is owned by Fannie Mae or Freddie Mac


Buying a HUD foreclosure with FHA financing

Minneapolis, MN:  The Minnesota and Wisconsin housing market for homes under $250,000 is hot…   Good homes priced well are selling very quickly, and usually above the original asking price.

I’ve run into this situation many time recently when buying a HUD home, so I thought I would address it here.

DOES MY BUYER HAVE TO USE HUD’S FHA APPRAISAL?

hh_fsThe quick answer is YES if using an FHA loan to buy the house.  NO if using any other financing.

If you are buying a HUD foreclosure, they almost always already have a HUD Appraisal.  This is good and bad.  On the good side, if the buyer is using an FHA loan, the buyer does not need to pay for one of their own.  They get to use the HUD appraisal.

If the buyer is using any other type of financing, the existing HUD appraisal is meaningless.  You will need a new one.

OVER ASKING PRICE?

But if the house goes into multiple offers, the buyers using FHA financing are hamstrung by the HUD Appraisal. Sure, they can offer more than the HUD appraisal, but any amount they offer above the asking appraisal amount will be additional cash out of their pocket above the standard FHA down payment of 3.5%.

For example, a HUD Home is on the market for $100,000 with an existing HUD appraisal at $100,000.  There are multiple offers.  You want the house.  You offer $105,000. Therefore your down payment is $8,675 (3.5% of $105,000 PLUS the $5,000 above the appraisal price).

 


Rates Tick Up – Buyers Want to Lock Low Rates

Minneapolis, MN: Mortgage interest rates have been near historic lows for a long time. Home buyers have fallen into a feeling that low mortgage rates are normal.  That attitude changed a bit recently as mortgage rates jumped up to the highest level in over a year.
lmrInterest rates on baseline  30-year fixed mortgage  surged 12 basis points to average 3.9% in the week ended May 24, the highest level since May 2012. The upward trend went even slightly higher this week, with most lenders reporting best execution rates at 4.00%
The slight up-tick in rates has caused many potential buyers to jump off the fence, and act now before interest rates go any higher.

So why are rates moving higher?  It is complicated, as there are many factors, but the simplest explanation is that the economy is slowly getting better.

Another big reason is that the FED has been propping up mortgages by being the primary buyer of mortgage backed securities. Without them buying these securities, the entire mortgage system would collapse. While they have, and continue to say they will buy the securities for the immediate future, there are signs that this policy may be changing, with a pull back of the buying because of the improving economy

Simply put, rates may be slowly starting to return to where the market should be if supporting itself, and not being propped up by the Fed.