Category Archives: FHA

First Time Home Minnesota

first_time_home_minnesotaSo you’re looking at buying your first time home Minnesota? If you’ve been paying monthly rent for a while, you know that you don’t get that money back. However, buy a house and you can deduct the cost of your mortgage loan interest from your federal income taxes. Not bad, huh?

When buying a first time home Minnesota, look for an area to live where you think you’d feel safe and comfortable. It should be in a place that’s near to the things you love, such as a particular church, library, shopping center, or friends/relatives. Keep in mind the distance between the potential house and your job—will it be no commute (working at home), a quick commute (10-15 minutes by car or bus), or a long commute (over an hour) to get to and from work? That’s one of the major decisions you have to make when considering your first time home Minnesota. If you’re the kind of person who doesn’t mind a “fixer-upper,” you can probably find a very affordable first time home and remodel it to your liking.

A home can be considered an investment, as it may appreciate in value in the coming years. For example, you might buy your first time home for $100,000 and ten years later it’s worth $150,000. There are usually some good deals on first time homes in Minnesota, so be on the lookout, in particular, for “HUD homes.” The lender (usually a bank) has foreclosed on a HUD home because the person who purchased it couldn’t make the payments, so the lender then owns it and wants to sell it at market value quickly.

As a first time home Minnesota, you may be eligible for some good deals because of the fact that you are a first time home buyer. To find out about Minnesota down payment assistance for your new home, contact Lake Area Mortgage at 651-209-2900.

6 Things First Time-Home Buyers Need To Know

6 Things First-Time Home Buyers Should Know in 2014

Assistance for first time home buyers in Minnesota is readily available. Here is some important first time home buyer advice and information you should know before you make your purchase.

  1. The U.S. Department of Agriculture (USDA) offers a zero down mortgage option for “rural development.” You may be thinking, “But I don’t want to live on a farm!”  but keep in mind that certain areas you wouldn’t think of as “rural” may actually qualify for USDA rural development financing.
  2. Military veterans may use the VA mortgage loan to finance their first home.
  3. The Federal Housing Administration (FHA) has a 203(b) loan which typically has a lower down payment requirement, lower monthly insurance premiums, and lower closing costs than other mortgage loan programs. First time home buyers should look into the FHA loan.
  4. If you’re thinking of buying a foreclosed home, a HomePath Mortgage may be of interest. With a low down payment, no mortgage insurance required, and no appraisal needed, a HomePath mortgage can help you buy a fixer-upper for your first home. Also look into what’s called HomePath Renovation, a loan to help finance the purchase and remodeling of an investment home, lending up to 35% of the as completed value—no more than $35,000.
  5. Got your eye on a home that needs major rehab that will cost more than $35,000? Apply for the full FHA 203k loan, which will help you make necessary structural repairs so you can have a nice first home. A variation on this is the 203k Streamline loan for homes that need minor repairs, up to $35,000.
  6. First time home buyers should talk with a mortgage consultant. They’ll check your credit score and help you see where you’re at financially, and whether or not you’d qualify for a mortgage.

In Minnesota, contact Lake Area Mortgage, a division of Lake Area Bank at 651-209-2900 for help with finding financial assistance, down payment assistance and more. The experienced team at Lake Area Mortgage can answer your first time home buyer questions, and guide you in the right direction to make getting that first home go from dream to reality.

Future Natural Housing Market Federal Intervention

Federal Reserve Chairman Ben Bernanke urged lawmakers to form strong housing policies to help the housing market recovery and advance the economy. Bernanke made the comments during a Q&A session following a speech in Cleveland on Tuesday about emerging market economies.

His remarks come at a time when more than 6.3 million homes are 30 days or more behind on their mortgage payments or in foreclosure, according to Lender Processing Services.

The Fed has taken steps that have been keeping mortgage rates hovering at or near record lows in recent weeks, but with unemployment still high, Bernanke said that record-low interest rates don’t seem to be helping the housing crisis.

During the speech, Bernanke called long-term unemployment a national crisis. About 6.2 million Americans, or 45.1 percent of all unemployed, have been jobless for more than six months  a total that is at its highest point since the Great Depression, HousingWire reports in citing government stats.

“Clearly getting more money into the hands of home owners who spend it could help to fuel GDP growth,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in remarks on Wednesday. “This would reduce one of the impediments to a more significant effect from the monetary policy actions taken to date.”

Minnesota New Record Mortgage Interest Rate Lows

30-year and 15-year fixed-rate mortgages hit record lows again this week reported by Freddie Mac in its weekly mortgage market survey.

“Continued investor concerns over the state of the European debt markets kept U.S. Treasury bond yields low and allowed mortgage rates to ease once more this week, says Frank Nothaft, Freddie Mac’s chief economist.

Here’s a closer look at rates for the week ending Sept. 15.

30-year fixed-rate mortgages: averaged 4.09 percent this week, down from last week’s previous record of 4.12 percent. Last year at this time, 30-year rates averaged 4.37 percent.
15-year fixed-rate mortgages: averaged 3.30 percent, dropping from last week’s record low of 3.33 percent. Last year at this time, 15-year rates averaged 3.82 percent.
5-year adjustable-rate mortgages: averaged 2.99 percent this week, up slightly from last week’s 2.96 percent average. A year ago at this time, the 5-year ARM averaged 3.55 percent.
1-year ARMs: averaged 2.81 percent, down from last week’s 2.84 percent average. A year ago, the 1-year ARM averaged 3.40 percent.

FHA Condo Approval HUD Minneapolis St. Paul

Check all CIC townhomes and condos here to make sure they are FHA HUD Approved.

Other factors not commonly known that will still be detrimental to successful financing with a condo even after we verify at the HUD condo lookup that the property is FHA approved.

  1. Commercial Space: No more than 25% of the property’s total floor area in a project can be used for commercial purposes
  2. Investor Ownership: Generally no more than 10% of the units may be owned by an investor. This also applies to developers/builders who subsequently rent vacant unsold units.
  3. Delinquent HOA Dues: No more than 15% of total units can be more than 30 days late in arrears of their association fee payments.
  4. Pre-Sales: At least 30% of the total units must be sold prior to endorsement of the mortgage in the case of new construction
  5. Owner Occupancy Ratios: At least 50% of the units must be owner occupied or sold to owners who intend to occupy the units. For proposed, under construction projects still in their initial marketing phase, FHA will allow a minimum owner occupancy amount equal to 50% of the number of presold units (the minimum presale requirements of 30% still applies)
  6. FHA Concentration: FHA may not insure more than 50% of a particular condo project. For projects consisting of 3-4 or fewer units FHA will insure 1 unit.

If these challenges are not researched prior to going under contract the lender will be alerted when they go to order a case number and HUD rejects the property address.

Minnesota MN Mortgage Insurance

As of April 18th FHA mortgage insurance is as follows:
  • 15-year loan term less than 10% down % : 0.50% per year
  • 15-year loan term, loan-to-value 10%+ down : 0.25% per year
  • 30-year loan term, loan-to-value less than 5% down : 1.15% per year
  • 30-year loan term, loan-to-value 5%+ down : 1.10% per year

To calculate your monthly mortgage insurance premium, multiply your mortgage loan size by your insurance premium, and divide by 12 months. You also have a 1% upfront mortgage insurance premium to HUD financed into your loan amount.

Homeownership Opportunity Program (HOP)

The Homeownership Opportunity Program (HOP) provides short-term, temporary financing for the purchase and rehabilitation of vacant properties in, or in imminent danger of foreclosure, and for properties in a foreclosure impacted area. HOP loans are paid off by standard first mortgage products when the rehabilitation is completed.

Borrower Eligibility
To qualify, borrowers must:
Intend to owner-occupy the property;
Meet income limits (total income less than $96,500 – adjusted annually);
Be pre-approved for a standard first mortgage with a loan amount sufficient to pay off the HOP loan when the work is completed.

Property Requirements
Cannot be in industry standard mortgage condition, and;
Must be a single family detached, zero-lot-line townhome, owner-occupied duplex, manufactured home on permanent foundation, and be;
– Vacant as a result of foreclosure, or
– In imminent danger of foreclosure with a negotiated short-sale, or
– Located in a foreclosure impacted area

Purchase After Foreclosure or Short Sale

You are eligible to purchase on a government loan, 3 years after the date of

  1. sherrif sale
  2. discharge date if included in a bankruptcy
  3. date of sale if short sale

Please beware and make sure if you are 1-2 years out you are checking and watching your credit to make sure that the below scenario does not happen to you.

You are also eligible for first time home buyer status where you may be approved for down payment assistance.

Today my client was beginning a mortgage pre-approval to purchase a new home. Due to husband’s loss of job in 2007 they lost their home to foreclosure. I was confident after my initial conversation that they would have no problem approving for a new loan. The sheriff sale was over 3 years ago. Both buyers have stable full time employment for the past 2 years. They had paid off a Mercedes lease 2 months ago and over $65,000 in credit cards, student loans, and unsecured debt in the past 24 months. There had been no late payments or collections in the past 3 years.

Unfortunately there was a surprise. Even though the home had foreclosed in 2007, EMC mortgage corporation still reflects they owe $129,000 on a home equity lien. EMC is reporting them late every month for the past 3 years. My client immediately called EMC and was told they still owe $129,000. The only solution will be hiring an attorney. Their credit is further damaged beyond the damage incurred by the initial foreclosure They should have over 700 credit scores after significant payoff of all debts and time elapsed, however their score is 576 today. We cannot help them purchase at this time until they agree to get EMC to settle, write off debt, or they pay it off.

Low Interest Rates Minnesota Mortgage Program

For buyers who do not need or qualify for down payment assistance we have the Minnesota Mortgage program comes with a subsidized interest rate .375% – .625% below market rate for government loans and .25% less for conventional loans.  Mortgage daily interest rates can be seen at

Mortgage Condos Townhomes Minneapolis St. Paul Twin Cities

Condominiums are just airspace within the unit surfaces. Legally known as “vertical subdivisions,” condominium owners own just the expensive airspace between their floor, ceiling and walls to the inner surfaces. The building structure is owned by the HOA, including the plumbing and wiring. The HOA usually also owns the common areas, such as hallways, elevators, land and parking areas. However, sometimes the common areas are owned by the individual condo owners as tenants in common, with the HOA responsible for maintaining the common areas.

Condominium owners often have the exclusive use of a specific additional area, such as a patio, balcony, storage area, and/or garage parking space. But the HOA usually has maintenance responsibility for those exclusive control areas that are part of the common area.

Townhouses and PUDs (planned unit developments) are slightly different. Townhouses are usually two-story condominiums with common walls shared with the adjoining townhouses. A few townhouses include ownership of the land beneath each townhouse, but many do not include the land that is owned as a common area by the HOA. However, if the townhouse is part of a PUD, then the homeowner usually owns the land beneath their unit. Either way, the HOA is responsible for the townhouse exterior maintenance, just as it is for traditional condominiums. Of course, individual townhouse and PUD owners are responsible for their interior maintenance, such as a dripping faucet or a plugged toilet.

There is much confusion over townhomes that are legally condos. Please make sure prior to viewing townhomes that the legal description on tax records is lot/block NOT CIC. If it is a CIC it is legally a condo even though marketed as a townhome. There is a link to the tax records on all online MLS links. Or you can go directly to the county website. Often times the listing agent will incorrectly state FHA/VA financing available because they haven’t done there homework. We get numerous clients who fall in love with a townhome that is legally a condo and not FHA approved prohibiting them from purchasing. If it is a CIC you will then need to check here to make sure it’s FHA HUD approved. You aren’t done yet, then you must make sure to check the expiration date and the concentration percentage. There cannot be more than 51% FHA concentration in any one development.