Depending on your loan type and individual program eligibility for First Time Home Buyer Programs, your down payment requirements for your home loan may vary from zero down to 3.5% or more, if you choose for down payment.  We will need to establish where this money is coming from and it will need to be from an acceptable, and verifiable source. 

Common down payment and closing cost sources:

• Checking Accounts
• Savings Accounts
• Independent Investment Accounts
• 401K or other retirement plans
• Down Payment Assistance Programs for First Time Home Buyers
• Gift Funds from a relative or closely related party
• Sale of assets (like a car or other verifiable asset)

These aren’t the only acceptable sources of funds for down payment, but are the most common sources of down payment.  Each of them have their own requirements for verification.  Typically, we can easily verify the first 3 with most recent account statements from our checking, savings or other investment accounts.  When it comes to obtaining money from a 401K or other retirement plan for down payment, we will need to know the terms of the withdrawal in addition to verifying the balance with a most recent statement.   

A few unacceptable sources of down payment

• Borrowed funds from an unsecured source (cash advances from credit cards or other loans)
• Gifts from sources where we can’t adequately prove a relationship
• Cash – by nature cash is not verifiable and is an unaccepted source of funds

Each person’s cash situation is different and the best place to start is by getting an education surrounding your particular situation and what to do and not to do throughout the loan process.  Even if you’re a year away from buying your first home, or your next home, starting to prepare early can prevent hiccups down the road.   Contact Carrie now or start the process by completing our online pre-qualification worksheet. 

If you’re a first time home buyer and you want to learn more about the process of buying your first home and down payment assistance programs that you may be eligible for as a First Time Home Buyer in Minnesota; attend our Free First Time Home Buyer Class.  Our next First Time Home Buyer Class is scheduled for February 9^th from 6:30-8PM.  Register online now for the Free First Time Home Buyer Class or call 952-808-0042 to register by phone. 

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Firstly, let’s talk about the income numbers we use and how they may apply to you.  For most mortgage loan programs we will be using your gross income to establish your maximum qualifying ability.   This means your income BEFORE taxes or other deductions are made.  This makes absolutely no sense to most home buyers, particularly first time home buyers as they have yet to see or experience the tax benefits of home ownership.   However, we will be using your gross pay figure for qualifying purposes. 

If your income comes from self-employment, commission, bonus, seasonal, part-time or other potentially varying income types, we will be averaging your income; over a two year period of time in most cases. 

In general terms, when it comes to income stability, we’re looking to show proof that you’ve had income for the prior two year period and to establish the likelihood that your income will continue for at least 3 years.  Very common situations:

• Recent graduate has first job and doesn’t have a two-year history.  We can use your new full-time, salaried or hourly income and show prior history through school transcripts.   Just keep in mind the varying income types above. 
• There was a layoff in the last 2 year period.  If you have experienced an extended layoff in the last two years, we will need to establish a new pattern of stability of income.  Typically, we can do this after a return to work or a new job with a 6-month history. 
• Child support or spousal maintenance that just started or will cease within a 3-year time period.   Good news, bad news here.  We can use child support or spousal maintenance for qualifying in most cases if we can prove the last 3 months receipt.  However, if the support will end in less than 3 years from your scheduled closing, we will not be able to use that income for general qualifying purposes.
• Cash income, non-reimbursed business expenses or other deductions on tax returns.  There’s an old saying I picked up somewhere along the way and it goes like this, “If you don’t claim it, we can’t use it.”   It’s really that simple.  If you don’t claim cash income on a tax return or if you deduct true business expenses on a tax return that aren’t reimbursed to you, we can’t use the cash income or must deduct those expenses from your income for qualifying.   

There are obviously a host of other considerations for income and varying responses to each unique situation.  The above are simply a few very common income scenarios we encounter.  If you have a specific income question you’d like an answer to, Ask Carrie.  I would be happy to answer your question!

Watch for our next post on the #3 Qualifying Consideration – Cold, hard, CASH and where you can get it from. 

Are you a first time home buyer and you’re interested in learning more about buying your first home in Minnesota?   We offer a Free First Time Home Buyer Class every month.  Our next class is scheduled for February 9th from 6:30-8PM at Cornerstone Mortgage in Burnsville.  Our classes all promise to be no-hassle, no-pressure.  Register online now for our First Time Home Buyer Class or call to register at 952-808-0042.   This First Time Home Buyer Class is a must attend for anyone who is looking to buy their first home with a desire to be well educated about the home buying process before they begin.  All first time home buyer class attendees will also receive a free copy of their consumer credit report upon request.  Credit review is an important first step in the mortgage qualifying process.

Bills and payments that haven’t traditionally been included in a person’s credit report will start showing up and credit reporting agencies will start providing far more invasive information – like estimates of a consumer’s income.  Take note and pass on these things that didn’t used to automatically get included in your credit report that will start becoming available in a separate score available to mortgage lenders:

• Payday loans
• Evictions
• Child support payments
• Rent, utilities and cellular bills may also eventually be tracked

This is a bad-news/good-news situation.  Banks and mortgage lenders feel these new inclusions will give them a better way to evaluate potential borrowers, but this additional information can eliminate some people from qualifying for a loan or require them to pay higher rates or fees because they are considered higher risks.  On the other hand, people who have little or no credit history will have other ways to show that they have paid their bills on time with things like monthly rent payments appearing in their history.  Currently, folks who save money, pay their rent and utilities on time but don’t have any credit cards or finance history suffer similar scrutiny to people with some “dings” on their credit records.

As lenders try to avoid the practices that led to the infamous “Mortgage Meltdown” and subsequent real estate market slump, consumers need to keep up with all the things that can affect their credit score and their ability to receive credit and borrow money.  Our credit score follows us everywhere we go like a “personal financial shadow.”  Make sure you’re not in the dark. 

 Want to learn more? Contact Carrie today. Ready to start the pre-qualification process for a mortgage, but concerned about your credit, or lack thereof?  Carrie can help.  Start the pre-qualification process online or call Carrie at 952-808-2810 to start the process over the phone.  

If you’re a first time home buyer, credit can be mystifying.  We host a Free First Time Home Buyer Class each month to take some of the mystery out of the process of buying your first home.  Our next Free First Time Home Buyer Class is scheduled for Thursday, February 9th from 6:30-8PM.  Register online for the February First Time Home Buyer Class or call 952-808-2810.  No matter where you are in the process of buying your first home, it’s never too early to start the learning process!

In terms of mortgage financing today – credit is going to play a large determining factor in a number of different elements:

• Instant loan approval or credit repair
• Mortgage insurance rates
• Loan Program Eligibility
• Minimum down payment options
• Interest rate
• Maximum qualifying amount
• Home owners insurance rates

Let’s unpack this a bit.  First and foremost, don’t click away if you have blemished credit or a lack of credit thinking you won’t ever qualify for a home loan.  Nothing could be further from the truth.  Certainly, there needs to be a plan and you may need to take some action, but you can recover from past credit woes and we’re here to help you take the right steps.  

There are some key positive things that we are looking for when assessing your long-term ability to repay a mortgage and we need to be able to prove that you are likely to repay your mortgage, on a timely basis.  That makes sense right?   So, here are a few things we’re looking for:

• 12 months of on-time payment history on at least 3 accounts.  These can be rental history, credit card accounts, car payments, student loan payments or other payments that report to a credit report or don’t.  Know that your standard rent, utilities and insurance payments don’t report to a credit report so these items will be known as alternative credit.
• You’re not “maxed out”.  Again, no running and hiding or clicking away because your one credit card with a $1,000 limit is at $1003 right now.  This isn’t a reason alone for denial.  However, when assessing your overall ability to repay, if you’re very credit heavy in terms of revolving debt and you’re completely maxed out, it doesn’t paint the most stable use of credit.   Ideally, your credit score and your loan application will be looked upon more favorably if you have available credit to use vs. credit that is completely used up.  
• A lack of overdrafts, overdraft protection advances or payday advances.   We understand an occasional blip – everyone has them – but recurring or consistent overdrafts or advances against pay say that you’re spending more than you have the ability to spend already or having difficulty managing your monthly expenses.  Keeping your bank account clean is ideal when applying for a mortgage loan.  If you do use overdraft protection on a regular basis as a normal course of financial business – stop now.  If you have an isolated instance that is easy to explain, simply be prepared to explain it.

Your actual credit score will play a role in your ability to obtain a mortgage as well as the items I listed above and there are some generic things you should understand about your credit score.  There are a number of different things that make common sense to you or me to do in preparation for applying for a home loan that may actually impact your credit negatively.  

Do NOT do the following without advice from your Loan Officer:

• Pay off collections
• Pay off accounts completely
• Close accounts
• Consolidate debt
• Acquire new credit
• Apply for new, additional credit

The best advice I can give as it pertains to credit and applying for a mortgage is to start by having us review and advise you specific to your individual credit situation.  Just as each of us are different as human beings, so are our credit profiles.  Making changes that you may see as positive could negatively impact you and items you thought may be seriously negative may actually not be so bad or be able to be easily remedied.   Take the time to visit with someone about your credit before your start your home search. 

We offer free consumer credit reports and analysis to all of our clients.  We will take a look at your credit report and your credit score with you and assess next steps in the mortgage pre-approval process.  You can start the process online by completing our online pre-qualification worksheet, contact Carrie via e-mail, or call 952-808-2810 to set up your one-on-one consultation and start the pre-approval process off right!

To learn more about mortgage credit standards today, attend one of our Free monthly classes for First Time Home Buyers or Current Home Owners.  

Our next First Time Home Buyer Class is Thursday, February 9^th from 6:30-8PM.  Register online for our First Time Home Buyer Class.

Our next Right Move Class for Current Home Owners is Saturday, February 25th  from 10-11:30AM.  Register online for our Right Move Class for Current Home Owners. 

The First Time Home Buyer Class and Right Move Class are both located:

Cornerstone Mortgage Company – 436 Gateway Blvd, Burnsville, MN 55337 – 952-808-0042

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During these one-on-one or group meetings, I jokingly address comfort level vs. qualifying ability.   I talk about the irrelevance of the amount of your pre-approval as it doesn’t take into consideration a number of different things you may want or need to pay for on a monthly basis.  I’m personally fond of Ramen – on occasion – but certainly don’t want to put people in a position where that’s all they can afford to eat.  I’m grateful to be able to say that the trend has shifted and most people come in with a conservative approach to home ownership today vs. just a few years back when everyone “had to have” everything they wanted when buying their homes even if it meant being completely house poor.  

My vision in providing home loan financing is to be certain that I am helping people to work toward three very specific goals – Strength, Security and Stability as they become home owners or continue on in home ownership.  One of the ways we can be sure to accomplish this is to be certain that you will be comfortable with the monthly payment and other expenses long-term. 

Whether you are a first time home buyer or a home owner looking to purchase a new home, there are a few simple exercises that I believe are fruitful for anyone to go through when looking at financing a new home:

1)      Track your monthly expenses in a budget.  Yes, I know budget is a horrible word that nobody likes, but it’s not that tough in light of online banking and other tools available to us today at nearly any banking institution.   We need to know where we spend our money before we know how much we could be comfortable paying or “giving up” for a new home.   It’s amazing how much money we “find” when we pay attention to what we spend and make minor adjustments in our spending. 

2)      If you’re a first time home buyer, be sure to consider full utilities and home maintenance into your budget for buying a home.  Most renters will need to account for gas, increased electric, garbage and water bills and should be comfortable setting aside at least 1% of the homes value for annual maintenance and home repairs.  

3)      Test yourself – how much can you save?   If you’re looking at increasing your monthly housing expense $500|month, can you comfortably set aside $500|month into a savings account and not touch it for a period of at least 3 months?

4)      Using #3 as a premise for testing your comfort level, are you also able to continue to save money at the same rate you did previously?  i.e. Can you set aside the additional 1% you will likely need for home maintenance and repairs or other short-term, intermediate or long-term goals like vehicles or vehicle repairs, vacations or retirement?   If you can’t continue to accumulate savings, you may also be pushing yourself too far.  

I know these are very simple tasks, right?  However, it’s not uncommon for the first time home buyer to not know or understand what they can truly afford on a monthly basis.  A number of first time home buyers today are moving straight from rent-free family living into home ownership and they have managed to save a decent sum of money yet haven’t thought about the long-term ability to continue that or, have been able to spend very freely because they weren’t obligated to pay a large monthly rental expense.  It’s also not uncommon for couples who are purchasing a home together and moving in for the first time to come into my office with completely different ideas of their comfort levels.  If you are in this situation, I encourage you to take the test together and you will very likely come to the same, agreeable conclusion on comfort level for a new house payment.  

Your comfort level and overall assessment of your short-term, intermediate and long-term financial goals will equate to long-term strength, stability and security in home ownership!  We’re here to help you achieve all three!

 If you are a first time home buyer and you’re looking for more education about buying your first home in today’s mortgage and real estate market, our next Free First Time Home Buyer Class is:

Thursday, January 20^th from 6:30-8PM – Register Online for the First Time Home Buyer Class

If you are a current home owners and you’re interested in learning more about today’s market for refinancing, selling your current home, or buying new, our next Right Move Class for  Current Home Owners is:

Saturday, January 22^nd from 10-11:30AM – Register Online for the Right Move Home Owner Class

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Many home buyers, particularly first time home buyers, don’t have enough money saved to cover their down payment and all of their closing costs and pre-paid items.  What are these amounts, what do they cover, and will the seller pay? 

In addition to your down payment amount, which will vary based on your loan type and pre-approval, you will have closing costs and pre-paid items that you will need to cover in your home purchase.   These items include but are not limited to:

• Lender Fees for Origination of Your Loan
• Appraisal Fees
• Interest you will pay at closing on your loan
• Mortgage Insurance (if applicable)
• Real Estate Taxes
• Home Owners Insurance
• Title Company Charges for researching and insuring the title of your new home
• Government charges
• Real Estate Fees you may agree to pay

Depending on the purchase price of your home, your loan amount, the property taxes and even your loan type, these amounts can vary dramatically.  Contrary to popular belief, there is no set percentage for closing costs or pre-paid items.  The reason a percentage doesn’t work is largely due to the fact that a number of closing costs are fixed amounts and as a result the higher your loan amount is, the lower the percentage will be.  Each individual home and your individual situation will cause these amounts to vary and, you have options as to how you want to structure your closing costs and pre-paid items. 

For example, mortgage loan guidelines will dictate how much you can ask the seller to pay in your closing costs.  For minimum down payment mortgage financing, FHA loans will allow for the seller to pay up to 6% in seller paid closing costs and pre-paid items, whereas with Conventional loans, the seller is only allowed to pay 3% in seller paid closing costs and pre-paid items.  Higher down payment loans and loan for homes you won’t occupy as your primary residence have varying guidelines. 

Seller paid closing costs are a common option in today’s Minnesota real estate market.  Most transactions will include some form of seller paid closing costs.  Now, let’s be realistic though – the seller isn’t giving you something for nothing. 

For simple math sake, let’s use a $100,000 purchase price example.  If you offer $100,000 to a seller and you ask them for 3% in seller paid closing costs, you’re actual offer is $97,000, not $100,000.  The seller credits the $3,000 back to you at the time of closing against your closing costs.   So, it stands to reason that you could have asked the seller for $97,000 for a purchase price and they would have accepted it the same as the $100,000 with them giving you back $3,000 at closing.  You are therefore, financing your closing costs over the life of your loan due to the higher purchase price and corresponding loan amount. 

Are the offers really the same?  Not really when you’re in the sellers shoes.   While the dollars and cents come out the same, keep in mind that you’re indicating to the seller that you don’t have enough money to cover these costs with this offer.  If someone else comes in with a lower offer, say $95,000, but they’ve asked for no closing costs to be paid for them, the seller may emotionally decide that even though their bottom line is a couple thousand less, the other offer is better because the buyer is a more financially solid offer.   If you have the ability to pay your own costs, handle them through structuring your home loan differently, or by using closing cost assistance as a first time home buyer, you may have the edge that the other home buyer doesn’t in a multiple offer situation. 

It’s also important to note that while FHA will allow you to have up to 6% in seller paid closing costs, our market isn’t allowing for that in most cases.  With lender mediated home sales nearing 50% of our home sales, particularly in the first time home buyer price ranges, you will find that banks who are selling bank owned properties or lenders who are negotiating short-sales are typically maxing out seller paid closing costs at 3%.  If you are preparing for more than 3% in seller paid closing costs, you may come up short if you’re looking at bank owned or short-sale properties. 

Ultimately, yes, you are likely to be able to include a portion of your closing costs in your purchase price to be paid by the seller.  This will allow you to reduce your cash investment at closing and if you’re a first time home buyer in Minnesota, there are a number of Minnesota First Time Home Buyer Programs that you may also be eligible for that include down payment assistance and closing cost assistance that can further decrease the amount you need to come up with for closing.   Find out if you’re eligible for one of these first time home buyer programs by completing an online pre-qualification worksheet. 

If you’re a first time home buyer and you’re looking for more information about buying your first home in Minnesota, special first time home buyer programs with down payment assistance or closing cost assistance, we offer a Free First Time Home Buyer Class the third Thursday of every month.  Our next First Time Home Buyer Class is scheduled for Thursday, January 20^th from 6:30-8PM.  Register for the First Time Home Buyer Class Online or call 952-808-0042 to register today. 

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When: Thursday, January 20th  from 6:30-8:00PM

Where: 436 Gateway Blvd., Burnsville, Dakota County, MN 55337

Registration: First Time Home Buyer Class Now

We will cover a host of topics while we walk you through the process of buying your first home in this 90-minute, no-cost, no-obligation First Time Home Buyer Class brought to you buy Carrie Guarrero of Cornerstone Mortgage Company of Burnsville, and Steve Howe of ReMax Advantage Plus and The Minnesota Real Estate Team.

Carrie and Steve deliver all of the key elements you need to know about buying your first home in Minnesota today in a relaxing and fun atmosphere.  It’s an excellent time to consider buying your first home in Minnesota.  Whether you’re ready to start the process of looking for your first home now or you’re simply considering whether buying your first home is something you should do, this first time home buyer class will help you prepare for the necessary next steps.

Carrie takes the mystery out of mortgage financing for the first time home buyer and provides valuable information surround special first time home buyer programs, down payment assistance, credit, loan types, mortgage insurance, qualifying for a mortgage and the whole process of getting a mortgage.

Steve will address current real estate market trends, negotiating a purchase agreement, home inspections and appraisals and searching for your first home as he walks through the process from the real estate side of the fence. We specifically designed this class to walk you through the process of buying your first home as you will go through it in real life.   You will leave this first time home buyer class knowing the next steps you need to take toward buying and financing your first home as well as a great understanding of the process from beginning to end.

 If you are a first time home buyer in Minnesota, education makes all the difference.  Watch what other first time home buyers who have attended this class have to say in this First Time Home Buyer Video.  Not able to attend the first time home buyer class and interested in finding out if you qualify for any special first time home buyer programs or down payment assistance programs for buying your first home?  Start the process online by completing an online pre-qualification worksheet or contact Carrie directly at 952-808-2810 to schedule a one-on-one consultation about your specific situation.

Carrie is an expert in special first time home buyer programs in Minnesota and has access to a number of down payment assistance and closing cost assistance programs throughout the state.  If you’re a first time home buyer who hasn’t talked to someone about special programs designed to meet the specific needs of first time home buyers, including reduced interest rates, down payment assistance, closing cost assistance and education about buying your first home, contact Carrie Guarrero today.  Want more information about special first time home buyer programs and other unique tools for home buyers in Minnesota?  Our site has a host of information available to you now:

Understanding the FHA 203K – Buy and Repair Mortgage

Minnesota Housing Finance Agency Programs – Reduced Interest Rates, Down Payment Assistance and Closing Cost Assistance, special FHA 203K program for First Time Home Buyers

Dakota County Bond Program – Reduced Interest Rates, Down Payment Assistance and Closing Cost Assistance for those buying their first home in Dakota County

City Living Program – Reduced Interest Rates, Down Payment Assistance and Closing Cost Assistance for those buying their first home in Minneapolis or St. Paul

Contact Carrie Guarrero for more information on these and other programs that you may be eligible for as a first time home buyer in Minnesota! 

In Minnesota, there are a host of different first time home buyer programs that offer a variety of benefits to the first time home buyer based on a variety of factors including income, assets and where you’re looking to buy your first home.  We work with you to assess your current financial situation, discuss options specific to you, and select a home loan program that best meets your individual needs.  

I regularly get the question, “Why didn’t the other lender I talk to mention these programs to me?”.  The answer is simple.  Not all lenders work with these special first time home buyer programs.   Most of them require some level of financial commitment, some require writing annual grants and working with community partners and others simply require a level of expertise in the area of first time home buyer programs. 

Some basics you should know:

• Minnesota Housing Finance Agency Programs offer down payment assistance and closing cost assistance up to $8500 and reduced 30-year fixed interest rate programs.
• Dakota County Bond Program offers down payment assistance and closing cost assistance up to $10,000 and reduced 30-year fixed interest rates for those purchasing homes in Dakota County.
• City Living Program offers down payment assistance and closing cost assistance for those purchasing in the cities of Minneapolis or St. Paul. 

In addition to the above programs, there are a number of different counties and cities throughout the state of Minnesota that offer additional down payment assistance or closing cost assistance programs that can be combined with the above first time home buyer programs or used independently to allow you to purchase more home or enjoy a lower payment as a result of a higher level of down payment.

Oftentimes, down payment is the largest barrier for first time home buyers. These programs allow first time home buyers to purchase a home for about the same down payment as a rental deposit. 

If you’re a first time home buyer; don’t let down payment, or lack thereof hold you back from the dream of owning your own home.  Contact Me today to start the pre-approval process or pre-qualify now online. 

We have a long-time commitment to serving First Time Home Buyers throughout Minnesota and working with these special first time home buyer programs.  Our main office is located in Dakota County, in Burnsville, MN.  

We also host a monthly First Time Home Buyer Class in Burnsville each month.  This Free First Time Home Buyer Class is designed to meet the need of all first time home buyers in Minnesota to become educated about the current real estate market, trends, the home buying process, credit, pre-qualification and pre-approval standards and various first time home buyer programs available to them. 

First Time Home Buyer Class Details

Next Session: January 20, 2012

Location: 436 Gateway Blvd, Burnsville, Dakota County, MN

Time: 6:30-8PM

Cost: Free

Registration:  Online First Time Home Buyer Class Registration or by phone 952-808-0042

I don’t think for a second that the abnormally warm weather is hurting matters as it keeps homebuyers out looking and able to actually see what they’re going to get vs. trying to imagine what it will look like after the thick blanket of snow melts.  However, the more likely factors are the combination of the low housing prices and low interest rates that keep home sales going at nearly 50% increases year-over-year.  

Another factor that appears to be keeping homebuyers looking is the fact that they haven’t been able to find something – and they’ve been looking for a while.   Our overall Twin City Market inventory levels have fallen below 19,000 total homes on the market.   This may sound like a lot of homes on the market to you, but if you put it in perspective, these are the lowest inventory levels we’ve seen since 2004, where I assure you, we were firmly planted in a seller’s market. 

Am I saying we’re in a seller’s market?  No, I’m not.  But, we could be headed there and sellers are certainly seeing the benefit if we simply look to numbers right now.  Sellers are seeing higher percentage of list price to sale price received on their homes and from my chair, I see homes that are priced correctly, selling quickly (with multiple offers) as they’re listed.  We definitely have a shortage of properties for new home buyers to choose from today in a lot of areas. 

Whether you’re a first time home buyer looking to purchase your first home or a jumbo home buyer, the shortage of properties on the market is something you’re likely seeing if you’re out looking to buy a home today.  

Be prepared for this and understand a few key elements to you succeeding:

1)      Get fully pre-approved early – Understand Pre-qualification and Pre-approval

2)      Work with an expert real estate agent – You NEED an Expert Real Estate Agent

3)      Know your loan options for homes that need repair – 203K and other rehab programs

4)      Be prepared for multiple offers and understand how to negotiate – Multiple Offer Situations

If you’re a first time home buyer in today’s real estate market, understanding the above, along with the loan options available to you and how they may benefit you is a key element in your success.   Special first time home buyer programs with down payment assistance and reduced 30-year fixed interest rates are just a few of the benefits you could be eligible for as a first time home buyer buying a home anywhere in the Minnesota Real Estate Market. 

If you’re purcashing in Dakota County, Minneapolis or St. Paul, there are specific programs for those purchasing homes in Dakota County and the cities of Minneapolis or St. Paul that you may benefit from if you’re a first time home buyer. 

We are experts in Minnesota Housing Finance Agency Programs as well as Dakota County Bond Program and the City Living Program.  In addition to these special first time home buyer programs, there are a number of other county, city and neighborhood programs that could benefit you as a first time home buyer today. 

We host a monthly first time home buyer class to help the first time home buyer navigate through the process of buying your first home today.   Our classes are all no-cost, no-obligation classes designed to prepare you for buying your first home and explain first time home buyer programs that you may be eligble for as a first time home buyer in Minnesota. 

Our next First Time Home Buyer Class is Thursday, January 20^th from 6:30-8PM.  Register online for our next Free First Time Home Buyer Class.   All of our classes our held at our Dakota County Cornerstone Mortgage Office, located at 436 Gateway Blvd., Burnsville, MN.   You can also register by calling us at 952-808-0042.  

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If you’re out looking for homes in today’s Minnesota real estate market, my guess is that you know what I’m talking about and you may very well have checked that home off of your favorites list and sent it directly to the trash in your online property search tool.  Don’t be so hasty!  You can make all things new with an FHA 203K.  An FHA 203K – what, you say? 

An FHA 203K is a buy and repair loan.  You can turn all of the above items and other home repairs into new and finance them along with your new loan at today’s record low interest rates.  If you’re like most first time home buyers, and even move-up home buyers today, down payment and closing costs are enough for you to consider, let alone looking at 10-20K in remodeling costs.  The houses you’re looking at may be right in terms of location, size, layout, but the outdated kitchen, repair items above or down right nasty bathrooms may be turning you away.  Or, it could be as simple as a need for all new flooring.  My husband and I giggled as we were touring some homes last year and encountered a home with a very open floor plan that had wildly different flooring in each and every space.  I encourage you to take a look at the FHA 203K loan as an option that can open up possibilities for you.  

We work with three different types of FHA 203K loans and are experts in assisting you in the FHA 203K process.  It’s a pretty simple process for you as the home buyer:

• Find a house
• Make your lists of wants and needs
• Select a licensed and insured Minnesota Contractor (Or we can recommend one who specializes in FHA 203K’s)
• Get a bid for the repairs
• Negotiate the items you want to complete and accept the bid
• Complete your loan paperwork financing the repairs into the home purchase 
• Start repairs after closing on your new home

Now, there’s a lot of work that goes on behind the scenes in terms of coordination with the FHA 203K contractor, the appraiser, and loan approval, but in simple terms, you work out what you want or need completed in the home, negotiate pricing with the contractor, and we coordinate the rest.  

The three different types of FHA 203K financing we offer:

1. First Time Home Buyer FHA 203K(S) – for first time home buyers to be used in combination with a Minnesota Housing First Time Home Buyer Program with down payment assistance or closing cost assistance.  The repairs done in this loan must be non-structural and cannot include personal property such as free-standing appliances.  Total repair costs must be below $15,000. 
2. FHA 203K(S) – This is a loan for those who have owned a home before or first time home buyers who aren’t using a special first time home buyer program.  You can finance up to $35,000 in total repair costs, and you can include free-standing appliance and any other non-structural home repair or improvement in this loan. 
3. FHA 203K – This loan is for those who are going big in terms of repair amounts or moving walls.  Yes, you can make structural changes with this program and there is no limit to what you can repair.  This loan type also requires the supervision of an FHA 203K consultant, in addition to the FHA 203K Approved Contractor. 

Big jobs or little pesky items, an FHA 203K loan option may be the right choice for you.  To find out more about if this is a viable option for you, contact Carrie Guarrero or start the process online by completing our online pre-qualification worksheet. 

If you are a first time home buyer in Minnesota today and you haven’t learned about first time home buyer down payment assistance and closing cost assistance programs, read more about First Time Home Buyer Programs in Minnesota.  There are a wealth of resources and special first time home buyer programs available today.  If you’re just starting the process and you need to take the mystery out of the first time home buying process, attend one of our Free First Time Home Buyer Classes.  Our next First Time Home Buyer Class is scheduled for Thursday, January 19th from 6:30-8PM.  Register online for January First Time Home Buyer Class now. 

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