Financing Tips

How To Get Rid of Mortgage Insurance

Many homeowners often ask me how to get rid of their mortgage insurance. Typically, you need about 20% equity in your home, whether that was from a 20% down payment or from paying enough of your mortgage balance. However, there are some types you can’t get rid of, such as FHA insurance or those with more stringent guidelines. You’ll often be given multiple options you’ll want to weigh out when purchasing a property. We’re happy to help you figure out the best plan and answer any other questions you have.

...

What First-Time Homebuyers Need to Know About PMI

First-time homebuyers ask us all the time: “What is PMI?” PMI stands for private mortgage insurance, which you will have to pay if you put down less than 20% on a home. This added layer of insurance protects the lender’s investment in the property. If you put down 3.5%, for example, that means the lender owns 96.5% of the home, and PMI makes sure they’re covered for that full amount if you can’t repay that debt. Essentially, the more money you can put down, the less your PMI will be on a monthly basis. To hear our full message explaining what PMI is, watch my latest video.

...

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...

5 things NOT to do when getting ready to Buy a Home

Buying a home is one of life's most exciting events and you have probably planned for, and worked hard to get to this point. To ensure that things go smoothly, don't make one of these 5 very common mistakes!  Sometimes the things listed below are unavoidable...if that is the case, please make sure you speak with your lender before doing any of the things below and he/she might be able to help you do things the right way!

  1. Do NOT make a job change. If at all possible, do not change jobs, quit your job, move from full-time to part-time, go back to school, or retire. Even if you are fully approved for your mortgage and then make a change, it could still affect your ability to close on a home because the mortgage company will call your employer the day before or day of closing to verify that your employment status has not changed.  If it has changed, you might not be able to close on your home!
  2. Do NOT deposit any money into your bank accounts that is not coming from your employer.  Any deposits you make or any transfers into your bank account for at least 3 months before your puchase will need to be documented. If you are planning to make a deposit into your account, please speak with your lender before doing so to make sure it won't cause any problems.
  3. Do NOT take out any new loans or accumulate any new debt.  This means no car purchases, no furniture purchases, no applications for new credit cards. We have too many examples of home buyers who went to the furniture store and purchased a new bedroom set on a 6 month interest free financing plan through a furniture store credit card and their new home closing fell apart as a result.  Just like your employment status, your lender will do a final check of your credit to make sure nothing changed and if they see new debt, it could affect your ability to close.  This also means you can't be LATE on...