Minnesota First Time Home Buyer Real Estate Blog

FHA Home Loan Checklist: Your Guide to Getting Approved

FHA Loans - Minnesota Home BuyersBuying a Minnesota home for the first time can seem like a daunting task, but that doesn’t mean it should be viewed as an unobtainable goal. But staying organized throughout the entire home buying process is important and will ultimately make finding and securing your new home a whole lot less stressful along the way. 

So, before you start looking for homes or even apply for a FHA home loan in Minnesota, take note of the following FHA loan checklist we’ve devised to help get you going in the right direction: 

Check your credit score - If your credit score is below 580, don’t apply for a home loan just yet. FHA loans require a minimum score of 580, and checking your credit score also gives you an opportunity to make sure everything is in order. 

Begin saving for a down payment - Although FHA loans only require a low 3.5 percent down payment, that’s still quite a bit of money you’ll need to have at your disposal. So devise a plan that helps you save, or check out our short list of tips for how to save for a down payment


FHA Loan Eligibility Explained

FHA Loan Eligibility ExplainedWhile the list of mortgage products out there today is actually quite extensive, FHA loans remain one of the top ways for first time home buyers in Minnesota to secure financing. Specifically designed to attract would-be home buyers with lower incomes or buyers unable to afford a substantial down payment, loans backed by the Federal Housing Association continue to help keep the dream of home ownership alive and well all over the U.S. 

If you’re unsure whether or not a FHA loan is right for you, here’s a brief rundown of FHA loan requirements and eligibility standards: 

Minimum Credit Score 

Although FHA loans help buyers with lower credit secure financing for a home purchase, you'll likely still need a credit score of 580 or higher.

Minimum Down Payment 

Prospective borrowers won’t need a 20 percent down payment with a FHA loan. In fact, you don’t even need 10 percent down. However, FHA loans do require 3.5 percent of the purchase price. 

Minimum Income 

While FHA loans don’t have defined income requirements, you’ll of course still need to provide proof you can afford a monthly mortgage payment. One way this is done is by making sure you don’t exceed a 43 percent debt-to-income ratio, and most lenders will even...

What Can I Buy with FHA Financing?

Buying a Minnesota home with FHA financing So, you’ve improved your credit score to a satisfactory level, you’ve either eliminated most of your debt or reduced it to below the FHA requirement of a 43 percent DTI, and you’ve gathered all your income documents to prove you can afford to take on a mortgage payment. The next logical question—now what? 

Well, the simple answer is, let the home search begin! But before you start diving into what’s currently on the market, it’s first best to understand exactly what you’re able to buy under FHA guidelines.

First and foremost, home buyers must be purchasing their primary residence when opting for a FHA loan. Vacation homes, a second home, and rental properties won’t be covered under FHA requirements. 

It is worth noting, however, that FHA financing CAN be used to purchase a family member a primary residence, and you’re also allowed to buy a duplex home using a FHA loan, as long as you live in one of the units for a minimum of one year. 


What Is Debt-To-Income Ratio and How Can it Impact Me as a First-Time Home Buyer?

What is Debt-to-Income RatioIf you’re a first time home buyer in Minnesota and have already started researching financing, chances are you’ve come across the words ‘debt-to-income ratio.’ Regardless of whether you’re looking to take out a FHA loan or a traditional mortgage with 20% down, lenders still need to determine each borrower’s ability to repay the loan and manage a monthly payment. 

One such method in deciding affordability is comparing a prospective borrower’s overall debt with his or her overall income—a personal finance measure known as debt-to-income ratio. 

Debt-to-income ratio, or DTI for short, is calculated by dividing recurring monthly debt payments by gross monthly income, which is then expressed as a percentage that equals how much of your gross income is already committed to existing debt.

For example, if your total debt equals of a $200/month student loan payment, a $300/month car payment, and a $1,000/month mortgage payment, and your total monthly income is $4,500, you DTI would be $1,500 ÷ $4,5000 =0.33, or $33%. 

As a general rule, most lenders prefer a debt-to-income ratio to...

Are FHA Loans a Good Idea For First-Time Home Buyers

FHA Loans Minnesota Home BuyersThe primary objective behind a typical FHA loan is to provide low to moderate-income home buyers a more affordable way to purchase a home. 

FHA loans also cater to prospective borrowers with lower credit scores or buyers that don’t have the means to put down 10 or 20% for a down payment, effectively making it the ideal mortgage product for first-time home buyers in Minnesota, and especially if you don’t qualify for a “traditional” home loan in today’s complex lending marketplace. 

If you’re somebody who may be looking to make the transition from renting to owning, a FHA loan may be worth looking into. In most instances, getting approved for a FHA loan means you have a credit score that is at least in the 600s, are still able to put down a three and a half percent down payment, and still have a relatively low debt-to-income ratio. 


How Much Money Will You Need For a Down Payment on a House?

Down Payment For a HouseWondering how much money you’ll need for a down payment on a house? Well, generally speaking, the higher the down payment, the lower your mortgage payment will be each month. But for many would-be home buyers out there, how much you’ll spend each month isn’t as big of an issue as how much money you’ll need upfront for the down payment.

In most instances, buyers will need to put down anywhere from 3 to 20% of the sale price, and that amount largely depends on the loan type. With a 30-year fixed-rate FHA mortgage, you’ll need a minimum of 3.5% down. Most conventional loans require a 20% down payment if you don’t want to pay for mortgage insurance, which typically costs between $30 and $70 per month for every $100,000 borrowed.

Certain federal programs, like VA Loans for example, don’t require any down payment, but you’ll need to meet various requirements in order to qualify for any government-assisted home loan program.


How Long Does it Take to Buy a House?

How Long Does It Take To Buy a House in Minnesota Wondering how long it will take to buy a Minnesota home? Well, that all depends on quite a few factors. While we’d all like the home buying process to be quick, easy, and relatively stress-free, sometimes that just isn’t the case.

The best way to determine how long it takes to buy a home is to break down the home buying process step-by-step:

How Long Does it Take to Get Pre-Approved?

The first thing you’ll want to do is get a pre-approval letter from a lender. But what does that entail? Well, again, this all depends. But you can reasonably expect about 18 days from the start of the process until all your financials are review and a commitment letter is issued.

How Long Will a Home Search Take?

Market conditions often dictate how long it takes to find a home. Are you in a sellers market, or is inventory strong and favoring home buyers? If options are plentiful, chances are you’ll find the right home faster. But realistically, expect your home search to take a minimum of 3 weeks; and that’s in a good market and only if you’re diligent about your search.

How Long Will Closing Take?

Believe it or not, one recent study found that it takes 50 days on average to close on a property. But between inspections, property title...

How Can I Rent And Save For a House?

How to save for a down paymentIt’s safe to say that most people would rather buy a home or condo instead of continuing to rent and pad a property owner’s pockets, especially right now when rent prices all over the country continue to spike. But if you’re someone who is finally looking to make the long-awaited transition from renting to owning, the pressure of buying a home probably feels greater than ever.

For example, did you know that NerdWallet recently estimated that it would take most Millenials over six years just to save up for a 6% down payment? Furthermore, statistics also show that inflation-adjusted rents have skyrocketed 64% from 1960 to 2014, while wages have only jumped 18% during that same timeframe. So with the cost of living so high for renters right now, just how are first-time home buyers supposed to save for a down payment? Well, here are just a few suggestions we’ve come up with that you may want to consider.

  • Pay down credit card debt - While this may seem like an odd suggestion right off the bat when the objective is to save money, paying higher-interest credit card rates only makes it harder to save money over the long-haul, ultimately preventing you from reaching your goal. Furthermore, paying down your debt will also improve your credit score and also your chances of securing a home loan when you’re ready to apply, so it’s really...

What is a Down Payment on a Home? We Break It Down Here

Down Payment Info While it’s safe to say most of us know what a down payment is at its core, many first-time home buyers still aren’t sure what a down payment entails, especially in today’s market. So let’s break it all down and start from the top:

Why do lenders require a down payment?

Simply put, when buyers fork over a significant amount of money upfront, there’s even greater incentive to make monthly payments moving forward so that money isn’t lost in a foreclosure.

What’s the minimum down payment you can make?

Most mortgage lenders require at least a 3% down payment, and FHA loans require 3.5% down. But depending on your credit history specifically, you could be forced to make a down payment of 3, 5, 10, or even 20 percent.

The downside of a smaller down payment

Any down payment made under 20% will require you to purchase mortgage insurance. Private mortgage insurance (PMI) will be one option, and FHA insurance is another. An FHA-insured mortgage is generally the most common mortgage insurance route to take, which means you’ll pay an upfront premium along with monthly premium payments.  In addition to mortgage insurance, making a smaller down payment might also mean you’ll likely pay a higher interest rate, or perhaps even higher fees at closing.


Buying a House For The First Time: Where to Start

Buying a Minnesota HomeBuying a home for the first time sounds like a great idea, until you dive deeper into the process and learn more about the ins and outs of what it all entails. It’s hard to argue that buying your first home seems like a daunting task on the surface, but just like riding a bike, driving a car, or the countless other things you’ve had to learn or do for the very first time, we promise you’ll survive and be better for it once you sign on the dotted line.

But to make life a little bit easier for you as you begin your first-time home buying journey, we’ve devised a checklist of sorts for you to follow along the way:

Review your financial situation thoroughly

First things first—figure out if you’re even in a position to buy before doing anything else. How much credit card debt do you have? Do you have a savings account with at least 3 months of living expenses built up? How much money do you have for a down payment? Are you also able to handle closing costs and other additional expenses related to buying a home?

Meet with a lender before searching homes

Meeting with a lender to determine how much you can afford certainly makes sense, but it’s also important to get fully pre-approved before looking for a home or making an offer. Most home sellers won’t even entertain an offer without a pre-approval, so don’t...

Minnesota Vikings Parting Ways With Ragnar

For over two decades, Ragnar and the Minnesota Vikings have been synonymous with one another. The Vikings mascot has been on the sidelines, pumping up the crowds and dressing as a Viking at home games dating back to 1994. Now, with Ragnar and the Vikings unable to reach an agreement via contract negotiations, it appears Ragnar will have to watch the Vikings games from his home and not the TCF Bank Stadium sidelines.

According to a source close to the negotiations, Ragnar made $1,500 per game last season; he was seeking a new contract with the Vikings that would cover the next ten years. He also wanted $20,000 per game over that time span. That's quite a raise he's asking for, to say the least.

While the Vikings community is up in arms over the whole ordeal, even going as far to create an online petition with over 10,000 signatures to date, it seems like the Vikings have to stand their ground here. $20,000 per game is a lot of money to pay for someone to dress up as a Viking and dance around on the sidelines. As iconic as Ragnar has been within the Vikings community, it's hard to argue any mascot is worth that type of coin. With eight regular season home games each year, Ragnar would make an estimated $1.6 million over that ten year contract.

It remains to be seen how this will all play out, but at this moment, it appears the Vikings and their long-time mascot will be parting ways. The story is sad, but it makes sense to me. Even as rich as the Vikings owners are, and as much as the team is worth, a mascot shouldn't get $1.6 million to be a mascot for ten years.

The Vikings will play their next home game this Sunday versus the San Diego Chargers. Vikings fans may have to get used to seeing the sidelines without...

St. Paul Saints Old Home Getting Demolished

The St. Paul Saints have their new home in Lowertown, the beautiful CHS Field. While I myself think this new ballpark is truly spectacular with great sight lines throughout, I didn't really stop to think about the fate of the Saints old home, Midway Stadium. Some of my earliest baseball memories are from Midway Stadium; it pains me just a bit to hear this is the week the old stadium faces its last breath: demolition.

The demolition began yesterday, August 19, and will take a full week to complete. The grandstand along the third baseline was the first victim of the heavy machinery charged with leveling the stadium.

The old murals that covered the walls, something I always cherished about the unique ballpark, will soon be nothing but a memory. With the Minnesota State Fair so close, I was hoping to be able to see the ballpark one more time on my way to the fair. The space will be nothing but a flat piece of land with some piles of rubble by the Great Minnesota Get-Together.

The stadium, though dated in even its last days of service, doesn't look like it used to. Graffiti, litter and overgrown grass and shrubbery now dominate the once proud space. Because the stadium is mostly a ghost land, the demolition is completely necessary, though bittersweet. The baseball has left and moved to Lowertown, but for many Minnesotans, the memories of the Midway Stadium will never fade.


Como Conservatory Celebrates 100 Years

A celebration of 100 years is no small deal, and the Como Park Zoo and Conservatory will celebrate the 100th year of the Marjorie McNeely Conservatory this weekend. This beloved building is reason enough to visit the Como area, with the beauty of the building showing both during the day and at night.

The Como Park Zoo and Conservatory will be taking this weekend to celebrate the 100 years, beginning with a ribbon cutting ceremony at 9:30 AM on this Friday (June 19). This will take place at the recent addition, the Centennial Garden. This space is a stylized take on the traditional European landscape gardens which used to bring visitors to the gardens in the early 20th century.

The weekend will host gardener exhibitions and discussions, musicians, the illumination of the conservatory dome on Friday evening (a gorgeous sight) and much more.

To check out the full spread of activities, visit: comozooconservatory.org.

Photo courtesy of: Richard Yuan


Apple Valley Basketball Star Returns Home

Tyus Jones playing for Apple Valley last year.

Many fans of March Madness fill out a bracket for the Men's NCAA tournament -- this year, if you chose Duke to win it all, Apple Valley native Tyus Jones led his team and likely your bracket to glory. The star shined in the NCAA basketball tournament proving he was one of the nation's best high school recruits last year -- many Minnesotans were a little sour Jones didn't end up chosing the Gophers as his collegiate basketball team, but clearly he made the right decision, choosing a Duke team that won it all in his freshmen year. 

He returned to Apple Valley at the end of April because the school honored him for his basketball accomplishments. Jones and Kevin Garnett also threw out the first pitch for the Twins at their home opener, showing just how big of a Minnesota favorite he's become. 

The young player also led his school to the Minnesota State Basketball Championship back in 2013 -- Jones' future in the basketball world is bright, giving Minnesota basketball a chance to stand proud. 

Image courtesy of: Gordy Hagert


Minnesota Cracks Down on Texting & Driving

Texting and driving is a very dangerous game -- it causes drivers to be distracted thus making the roads even more dangerous. Minnesota is taking steps to crack down on drivers who use their phones while operating a vehicle.

The Minnesota Department of Public Safety is putting together plans to target distracted drivers, with state troopers, city police and county deputies on the lookout for those not giving their full attention to the road. Signs of distracted drivers are swerving, inconsistent speeds and drivers looking down into their laps. 

Drivers caught giving into distraction will be issued citations of $125 to $145. This extra enforcement will run until April 18th in an effort to get operators out of this bad driving habit. 

It is still legal for drivers to make calls while driving -- this crack down is on those texting or using the Internet while driving, even while stopped in traffic. Proving a driver is violating this law on their phone can prove tricky for officers -- but law enforcement can also write a moving violations for poor driving, whether it be from texting, a phone call or messing with the radio. 

This crack down is much needed as last year a quarter of crashes in Minnesota were caused by distracted driving -- one quarter. Imagine if drivers were fully immersed in operating their vehicles, accidents would drop by one quarter. 

I for one always get annoyed seeing drivers with their eyes in their laps, then up to the road, then back to their lap. This crack down will helpfully get drivers to focus on the task at hand -- operating their vehicle safely. 

Photo courtesy of: Vivian...

Minnesota Stops the Freeze on TurboTax Prepared Returns

In the past week many Minnesotans seeking to get their 2014 taxes done have been on a rollercoaster. Because of an apparent security breach of Turbo Tax's database, the Minnesota Department of Revenue suspended consumer's ability to submit their returns on the widely used tax software. With so many Minnesotans filing their taxes with the inexpensive Turbo Tax, many were reeling about how much they would have to pay in order to file without the cheap option.

The Minnesota Department of Revenue released in a statement on Saturday that they would again accept returns filed on Turbo Tax from Minnesotans. Intuit, the company who produces the Turbo Tax software, said their system had not been breached, resulting in the reversal of the Minnesota Department of Revenue's decision to ban the tax returns filed by the software. Intuit even went the extra mile and "implemented new and targeted security measures." 

This news is welcome to all those who love the simplicity of Turbo Tax and just how easy it can make filing taxes. 


Get the Best Prices at the Pump - Every time!

If you've been driving at all in recent months, you clearly have been paying attention to the downward spiral of gas prices. All of us Minnesotans have been loving this trend -- cheaper prices at the pump definitely put a smile on Minnesota drivers' faces. But how many times have you filled up at the pump and then driven down the road a mile and seen a gas station with prices that are three cents lower a gallon? To prevent this from ever happening to you again, before you fill up next time, check out Gasbuddy.com -- they have created an interactive map that has all the best gas prices at stations around the Twin Cities. 

If you really want to feel good about being a Minnesotan getting the best deal, check out the map from a national scale where prices are much higher in many areas of the country, especially the coasts. In California and New York, prices are well over $2.50 a gallon. So, despite the freezing cold experience of filling up in the frigid winter, at least you can feel good about getting the best deal from Gas Buddy and feel good about the fact that you aren't paying as much as New Yorkers. 

Check out the interactive map below. Punch in your area code to hone in on your area. 

Twin Cities Gas Prices...

Expiration of Federal Housing Administration's Property Flipping Waiver

The real estate market will be changing in the coming months -- a decision from the Department of Housing and Urban Development will not extend their waiver beyond 12/31/2014, a decision that will limit investor/rehab contractors from buying distressed properties, fixing them up and selling them to a buyer within 180 days. So for all you HGTV fanatics out there who love those rehab shows, this practice might become more and more rare with new restrictions.

Most of the rehab projects exceed the "sell for more than 100% of the recent purchase price" portion of the rule, which means an investor would need to hold the property for at least 180 days before being able to sell it to a buyer using an FHA mortgage. Many first time home buyers use FHA mortgages and many of these flipped properties are in the price range of first time home buyers. 

A quick restore on a distressed property and flip is how these investors make money and revitalize previously lost pieces of real estate. The Federal Housing Administration is prohibiting this practice because it eliminates the most egregious examples of predatory flips within the FHA mortgage insurance programs. These investor/rehab contractors still have the option to sell the property under 180 days, however, the property is then not eligible security for a mortgage insured by the FHA (there are exceptions in the fine print). 

How this will affect the market in total will be determined in the coming months and years -- this certainly will mean a change in how house flipping is practiced. 

Image via: REMAX 


Minnesota Paid $40 Million to Federal Government in 2013

In 2013, the state of Minnesota's businesses and citizens paid $85.9 billion in federal taxes, but only got $45 billion back in federal grants, contracts, salaries, benefits and other compensation. This $40 billion divide is among the highest in the country according to the National Priorities Project.

“Minnesota is younger, healthier and wealthier” than the vast majority of the nation, said Dartmouth government professor Dean Lacy, who studies the relationship between states’ federal contributions and benefits.

Minnesotans paid an average of $15,847 per person in inflation-adjusted federal taxes last year — twice the U.S. average. The state also ranks in the bottom third of states in per person receipts for federal programs like food stamps, Medicare, education benefits and unemployment benefits. Keep in mind, these are federal program statistics. 

These numbers point to the fact that Minnesota has been working tirelessly to use its own state funds to take care of the problems within the state's borders. 

“We tend to take care of our problems before the federal government has to,” said Jay Kiedrowski, an expert in leadership at the University of Minnesota’s Humphrey School of Public Affairs. “That’s why this is a tricky problem. It’s really a hard dilemma. … In a sense, we’re being penalized for being efficient.”

Minnesota is a state with high-income citizens and low poverty and those states tend to pay in more in the U.S. If the state had more poverty, it would collect more in federal funds. Many of the states...

35W Could Look A Lot Different in the Future

Many cities across the US have been undertaking projects to put "caps" or "lids" over large, noisy highways -- this process involves burying the road underground, creating a tunnel system, and having something much more natural on the surface, like a park or residential space. 

Minneapolis planners are more than flirting with the idea of "capping" a spot on 35W that spans from Downtown East to the Cedar-Riverside neighborhoods. This cap would create more than 17 acres of new land. 

Chicago, Seattle and San Diego have all successfully completed cap projects. This leads to new growth in the former motor causeway, leaving room for prosperity of parks, residential areas, and of course, commercial development (likely a huge way to gain back some of the cost of said project). 

But with such a large undertaking, how much would something like this cost? As of now, the planners have no real estimates as they are in the very early stages of mapping out the potential project. 

While the benefits could be numerous, will they outweigh the expensive price tag attached to this massive project?

Photo by: Matthew Deery