Understanding your home financing options in Minnesota is the first step toward a successful home purchase. Whether you are a first-time buyer or looking to upgrade, preparing your finances early ensures you get the best possible mortgage terms.
Explore Your Home Financing Options in MN
Before you begin touring properties, it is essential to understand the different home financing options in Minnesota available to you. From conventional loans to FHA and VA programs, each has unique requirements for down payments and credit scores. Preparing the following “Green File” will help you stay organized regardless of which loan you choose.
Start A Green File
A Green File should contain all of your important financial documents. Regardless of the loan type, lenders will need information about you. Make copies of financial statements; bank accounts, investments, credit cards, auto loans, recent pay stubs and two years’ tax returns.
Check Your Credit Rating
Credit scores range between 400 and 800. 620 + is considered “good”. 680 + is considered “premium” and may possibly help get you a lower interest rate.
Below you will find the contact information for the 3 major credit reporting agencies to help you determine your credit rating. Ask your lender how to improve your credit score if you need to. Going forward, treat your credit like gold.
| Equifax | http://www.equifax.com | 800.685.1111 |
| Experian | http://www.experian.com | 800.392.1122 |
| Trans Union | http://www.transunion.com | 800.888.4213 |
Savings & Debt
If you are buying real estate, try to accumulate funds towards your down payment, closing costs (appraisal, miscellaneous fees, escrow, title insurance, etc.) and expenses such as inspections. Furthermore, try to pay down existing revolving and high interest rate debt like credit cards.
Toe The Line
Now is not a good time to change careers, move your money around, or buy big-ticket items. Lenders like stability. If you are considering any major changes, it pays to meet with a lender and ask them how to proceed! If you are tempted to buy a big-ticket item, consider the following:
| A $500 a month debt payment (like a credit card or auto loan) could lower the amount of home you can afford by about $83,000! * |
* Based on a 30 year mortgage at 6% interest.
Finalizing Your Financing Plan
As you evaluate your home financing options in Minnesota, remember that property taxes vary by county, which can affect your total monthly payment. For a deeper look at your rights and the legal process of securing a loan, we recommend the Minnesota Attorney General’s Home Buyer’s Handbook. Once you are ready to take the next step, contact NOW Realty for a list of trusted local lenders.