contract for deed

7 Common Mistakes First-Time Home-Buyers Make

 1000 500 Sam Radbil
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Purchasing your first home can be one of the most memorable moments in your life.

But along with this excitement can come many questions and uncertainties about making sure that the correct decisions are in place. From location to finances (and everything in between), several considerations need to be taken to ensure that buying your first house will be a fond memory to look back on.

white and red wooden house miniature on brown table

We know you’re doing a ton of analysis and home searches, perhaps you’re diving into the Redfin vs. Realtor searches and things like that. But, first, take a look at a few common mistakes that first-time home-buyers make and how you can avoid them.

Neglecting a life insurance policy

Whereas around 85% of homeowners have homeowners insurance in the United States, another type of insurance that homeowners with a mortgage need to consider is life insurance.

While life insurance may be a task that you feel inclined to push off (as it’s harder to think about you or a partner passing during the excitement of shopping around for a new home), securing a policy can help save the financial well-being of your loved ones.

There are several different types of policies, so research which kind of plan is the most affordable option for ensuring that mortgage payments go through if there was a sudden loss of income.

Because mortgages typically extend through many years, a life insurance policy prevents passing along this debt to your partner or family. There are online life insurance resources that can help navigate how long you should plan on securing a plan for your circumstances and new homeownership, which factors will influence your rates, and which type of coverage is available.

Overlooking the importance of location

You may have found your dream home, including all the features you were looking for in your new place, along with the right price tag. But something that is just as important to remember when saying ‘yes’ to the house is also where your new home is located. Several factors make up what is considered a ‘good location,’ so spend time analyzing what can be dealbreakers or what you are willing to settle one.

For those with jobs farther from their home, make sure to factor in your daily commute and how much time you are willing to spend transporting to and from work.

blue earth globe on table

Furthermore, consider those living around you. If you are seeking a quieter neighborhood, or prefer something more lively, make sure that your choice takes into account how the people around you and your surroundings will impact the satisfaction in your first home experience. Be sure not to sacrifice on location, even if it means waiting to find a better fit.    

Forgetting a back-up entry plan

As mundane of a task as it may seem, many first-time home-buyers neglect to have a spare set of keys cut in case of emergency or alternative entry options after settling into their new place.

Preparing for unforeseen circumstances, in the beginning, will ensure that you will be ready for these situations before they arise. In addition to getting spare keys made, it is also a good idea to have a secure place to hide them outside of your home to avoid burglary. 

If you prefer more modern or alternative technology, consider investing in a keyless door lock. Write the password information down somewhere safe and have extra batteries on hand if needed. Focusing on the security of your new home will allow you peace of mind knowing it is taken care of even when you aren’t around.

Packing unnecessary clutter

In the moving process, new homeowners should reflect on their belongings and what is actually essential to bring with them to the new house. Along with the other stresses that come along with moving into a new home, bringing unnecessary clutter can add to all the other pressures you may be dealing with. 

In fact, studies have shown that the average American home consists of 300,000 items. Before committing to your moving company or making arrangements, go through your belongings and get rid of unnecessary items.

assorted-color apparels

Not only can this reduce moving expenses and save you time in your unpacking process, but having less clutter can create a smoother transition and more polished home. Additionally, having a garage sale or selling unwanted items online can help diminish a few of your moving expenses.

Focusing on multiple projects

The chances are that you will want to make to your new home either after or before your move-in date—like renovations, repairs, remodels, or re-decorating. While you may feel inclined to jump into several projects at once, remember that tackling one project at a time can actually benefit how fast and efficiently you complete all your plans.

If you are looking to hire a professional for a job, search around for trusted and local people who can get the job done. Planning this out in advance will also help you gauge the amount of time needed to finish your projects— and can even be helpful to compare to which home improvement ideas you can do on your own! 

Reflect on home maintenance

When selecting a new place to call home, don’t forget about the maintenance on the outside of your house. If you are looking to secure a large back yard or the property has several plants or trees that will need maintenance, consider if this is something you are willing to upkeep actively.

Examining your new home’s maintenance will also include tasks such as cleaning gutters, pest control, and roof preservation. Establishing a plan and determining how much time you are willing to spend on these responsibilities will help you set aside the necessary budget and time you will need to maintain the beauty of your new home. 

Disregarding organization with finances

While you may have a vision of what you want your dream house to look like, remember when buying your first home that purchasing within your means will help your financial stability in the long run. Shifting from renters to homeownership can be an adjustment, and often time new homeowners tend to underestimate the way this lifestyle change can have an impact on the revisions you must make in dealing with your finances.

Luckily, there are professionals, like the C4D crew, that can help you navigate these tougher decisions and organization of your finances.

To gain the most of your first home-buying experience, avoid these common mistakes, and actively set yourself up for the most enjoyment in making the big move. Find confidence that you will make the right decisions, and above all, congratulations on becoming a new homeowner.

buying a house during coronavirus

Purchasing a Home Sight Unseen: Pros and Cons

 1000 500 Sam Radbil
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While most people are staying put during the COVID-19 pandemic, you may actually have to think of buying a house during coronavirus. Maybe you actually got a new job in another part of the country, or possibly you just want to get out of a hotspot area like New York City. Or, a once-in-a-lifetime deal has been presented to you, but you would have to move on it quickly.

 While you have always been conservative in all facets of previous home purchasing, you may really feel that you have to buy a property that you will not have the ability to personally and carefully inspect. What are the pros and cons of making such a move and buying a home during coronavirus?

The Potential Problems

The main issue with buying a house you have only viewed on various real estate is that those beautiful sky blue and orange-lit pics have been photoshopped to represent the home in the best possible manner.

kitchen with island and table

Careful use of photo editing techniques can hide a lot of flaws, and if you just depend on website home pictures, you might be seriously disappointed when you finally arrive at your new house. To avoid these problems that can occur when buying a house during coronavirus, check out the following things you can do to avoid costly disappointment.

Check Out a Lot of Online Listings

When attempting to go through the process of buying a house during coronavirus, get familiar with the online shopping process. First, type in the address of the property and see how many different listings you can find.

Sometimes you can find a generic older listing that will give you a different property view. Also, try to find the addresses of the properties on either side of the one you are interested in as locating these may show you additional views.

Video Tour

Demand a video tour. Or some type of virtual tour, at the least. If the sellers are not set up to do this professionally, they can do a FaceTime version where you could ask questions as the tour happens. The sellers could also take smartphone videos and email them to you.

Check Out the Neighborhood

A free-standing single-family home might look great, but if it is located next to a used tire shop, for example, you may not want to purchase that home.

top view photo of houses

Aerial Google views will be a great help here as you can scope out the area that surrounds the home you are thinking of purchasing.

Get the Best inspector You Can Find

Sure, a picky home inspector can kill a deal, but some deals need to be killed. If there are glaring difficulties, maybe like a roof issue, that could cause your lender to back out, or worse, could cost you thousands of dollars after the sale has been completed, you want these issues out in the open before you even think of closing the deal. A good home inspection can cost at least $500, and even though you as the buyer must pay for this, it’s worth it.

Find a Friend

If there is any way you can locate a friend or acquaintance in the general area of your proposed home purchase, it’s possible that they can take a look for you. The more people you can find to check out your property, the better off you’ll be.

Use a Lawyer 

We realize that there are excellent state-approved forms that are a great help to those that want to use DIY paperwork. Also, the lender’s attorneys will carefully look at closing documents since it’s in their interest to protect you.

person holding pencil near laptop computer

That said, there are protections that can be afforded you in any offer to purchase, but you have to know how to correctly word these documents. For example, a financing contingency can expire, and you can unknowingly obligate yourself to purchase a property even if you think you could get out of the deal if your loan falls through. Therefore, especially when buying a home during coronavirus, use the services of a good real estate attorney.

Real Estate Agent

Be sure to find a top-quality Realtor or real estate agent that will represent you as the buyer.

selective photo of gray key with heart key chain

A hard-working real estate professional can view the home, write up an offer to purchase that will be ready for your attorney’s review and will be someone that will protect your interest—not the seller.

Take the Surprises in Stride

Finally, remember that no matter how much diligence you do, you still will probably find an issue that has eluded you. Maybe there will be a tiny mold spot above the shower or previously unseen crack in an inconspicuous window. These issues can be minor, so don’t sweat the small stuff when you finally are able to move in.

red blocks on brown wooden table

Buying a house during coronavirus definitely presents unique challenges, but if you systematically and diligently evaluate a property, and if you are sure to pay attention to the tips we have mentioned, you can successfully buy a house sight unseen.

types of real estate investments to know

Real Estate Investing 101: How It Works in 2019

 1000 500 Taylor Witt
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We know you’ve seen it — an infomercial by an energetic self-proclaimed real estate investor. He has made millions of dollars perfecting the best practices for certain types of real estate investments and he wants to let you in on his secrets for the very reasonable price of only $_____. 

Image result for get rich quick real estate photo chart graph

Unfortunately, as is the case with most investments, there is no magic formula, golden bullet, or secret way to easy riches. 

If you are really interested in certain types of real estate investments, you need to do your homework, and we have outlined some basic principles and ideas for you below.

The Idea for Types of Real Estate Investments

types of real estate investments

To make money in real estate you need to ultimately buy a property and then sell it for more than you bought if for. That may sound easy, but real estate usually costs a lot of money and you’ll need financing to make most of these deals happen. 

But first let’s look at the ways you can make money without using any outside financing sources.

Quick Turn – Wholesale

A quick turn means you control a property for a short period of time and then get rid of it at a profit.

Picture this: You find a motivated seller that is willing to get rid of their property for $100,000. Then, you find a buyer that’s willing to pay $110,000. 

You play middleman, get the parties together and take the $10,000 as an assignment fee. 

Another way to do a no money down deal is to buy an option on a property. An option gives you the right to purchase a property at a certain price for a certain period of time.

If you can purchase your option for a cheap price, and if you can then find someone that wants the property, you can sell your option at a profit to that buyer. 

Of course, there are a lot of “ifs” involved, but these deals do happen.

Quick Turn – Retail

This is a more traditional way to make a good return in a hurry. You buy a fixer-upper, renovate it, and sell it for more than you paid for it. This is the basis of the many HGTV shows you have undoubtedly watched, and if you have been a careful viewer, you are aware of the pitfalls involved in certain types of real estate investments.

One excellent way to make money in real estate while reducing some stress is to buy a fixer-upper and live in it. While you occupy the property, you repair it. Since you are occupying the property, you would have the same monthly housing cost as you would anywhere, and your only additional costs would be for remodeling and renovating. 

This deal works particularly well if you are able to do the work yourself. If you are the type of person that needs help changing light bulbs, the occupy and remodel plan might not be best for you, however.

The Long Term – Renting

There are other ways to make money in real estate. You can buy a piece of property and then rent it. If you do it right, you can create monthly cash flow while have your tenant pay down your mortgage. 

Check this out: A savvy investor bought four houses in the year 2000 in Austin, TX. 

These were single family homes of around 2500 square feet, and they were purchased new for about $130,000 each.

The investor put $30,000 down on each of the and took out mortgages of $100,000 per property.

With taxes and insurance, the monthly payment for each property was around $850. The investor was able to rent each property for $1000 per month so the $150 profit margin he managed to generate each month was slim. Now, in 2019, the properties rent for $2100 each, and even though taxes have gone up, the investor is still clearing $600 per month per home. In addition, the mortgage balances on each home have been paid down to only $50,000. 

Better yet, Austin real estate has skyrocketed in price, so those homes are now worth over $300,000 each. If our investor sold the homes today, he would make close to $250,000 on each on each one!

Image result for renting investment property chart graph 2019

Equity Play

Another way to make good money in a rising market is to buy a property and rent it even though the rent collected may not total more than the monthly mortgage costs.

Even if an investor has to feed a property a few hundred dollars per month, big gains can be realized at the end. For example, an investor buys a $300,000 home. His monthly costs including principal, interest, insurance and taxes are close to $1900. He can only rent the home for $1700, but the value of the home increases to $400,000 in five years.

Yes, our investor technically loses almost $10,000 in cash flow over the five-year period, but when he sells the home for $100,000 more than he paid for it, the losses are erased. 

Of course, you need to take other things into consideration like repairs, maintenance and vacancies, but it you do your homework and are patient, you too can make money in certain types of real estate investments.

Contract for Deed

[2019 UPDATES] Contract For Deed: The Ultimate Guide

 1000 500 Sam Radbil
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Contract for Deed Home Financing in 2019

Contract for deed home financing is a great option for those individuals struggling to get a traditional loan from the bank. Now, let’s get into the details.

Conventional financing, in 2019, as we all know, is the preferred home loan vehicle. This refers to a standard mortgage loan from a licensed lending institution, and typically can be a15 or 30 year loan with a down-payment that ranges from 3 percent to 20 percent. The higher your credit score, the better deal you will get.

Even before you find your dream home, you should obtain mortgage pre-approval from your lending institution. While pre-approval does not guarantee that everything will go smoothly, it does provide you with significant negotiating power when dealing with sellers.

Applying For Conventional Financing

Your parents probably had to spend an afternoon at a banker’s office when they applied for their first home loan. Now, you can do this by phone or online, although you will eventually have to sign closing documents in person. Some important things to do and factors to be aware of are:

  • Know your credit score.
  • You can easily see this number at Credit Karma, and the service is free.
  • Determine what factors make you less attractive.
  • High student loan balances, maxed out credit cards, judgments, liens, unpaid taxes and underreported income can hurt you.
  • Analyze your actual credit report and correct errors. The FTC reports that one of every five credit reports contains inaccuracies.
  • Optimize your credit status by paying down card balances to below 30 percent; do not make any large credit purchases while attempting to secure home financing.

Understanding What You Can Afford

Banks have certain debt to income ratios that they do strictly enforce. The Consumer Financial Protection Bureau (CFPB) explains:

“Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income.  This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed.”

To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out.  For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)

Evidence from studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. The 43 percent debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still get a qualified mortgage.

Housing Affordability

Finding Your Home

You can spend all day trolling Trulia and Redfin, but many times you can be missing out on homes for sale that only Realtors can easily access. Remember, sellers pay real estate commissions—you don’t—so avail yourself of this free service and find a good Realtor.

Finding Your Home With Contract For Deed

Working With A Contract for Deed Realtor

The Realtor/client relationship is a two-way street. If you are a type A personality and want all of your texts answered within two minutes, make sure your Realtor is as hyper as you are. Conversely, don’t expect your Realtor to work miracles with incomplete or false information. For example, don’t inflate your income and/or minimize your debts at your first meeting. In the credit world, there are no secrets, so be upfront with you Realtor.

Turned Down For Traditional Financing?

Mortgage Rejection

Those that give up after being rejected for a home loan end up renting apartments while those savvy enough to understand that there are alternatives to conventional financing will look at the rejection as a bump in the road and move forward. Rent to own is one way to become a homeowner, but a preferred method is MN contract for deed. In a rent to own situation, you pay rent to a property owner that may put aside a portion of your monthly rent as a down payment for a future purchase.

If everything works out, either the seller provides financing or you obtain it at some later date. In a contract for deed sale, you sign a contract that states that you will be given the deed to the property you are occupying after you make all of your required payments. Contract for deed is seller financing, and while interest rates can be a bit higher than conventional financing, credit requirements are typically significantly more lenient.

Finding Contract For Deed Opportunities

There are a limited number of MLS contract for deed listings.  If you’re lucky, you might find the right opportunity in a nice location. At C4D, however, we give you an advantage that others that wish to utilize contract for deed just don’t have. Just bring the home you wish to purchase to us. If we can do the deal, we will purchase the home and sell it to you on a contract for deed basis. We have paved the home ownership road for many that were rejected for conventional financing. Application is easy—just go to our website. C4D has the financial power behind them to make these deals happen.

Contract For Deed Documentation

While C4D offers less stringent credit requirements, we still will need pay stubs and bank statements. We look, however, at your situation today, and we care a lot more about what you can do now than what bad things have happened to you in the past. At C4D even high student loan balances and recent bankruptcies are not necessarily the hindrances they would be at a large bank.

Contract For Deed: How It Works

Although the nightmare of waiting 60 days or more to close on even great credit deals is generally behind us, banks take longer than we do at C4D. We usually can close deals in as fast as two to three weeks.

MN Contract For Deed Costs

We’re upfront about all of this. We do require an origination fee and we do add a small initial property markup. And, the interest rate you pay will be higher than the prevailing conventional mortgage interest rate.

Contract for Deed: What Problems?

We have many satisfied former renters that are now homeowners. We are transparent and forthright. If we can help you, we do everything possible to get your deal done. We are MN contract for deed experts, and happy customers are our paramount concern.

If you deal with an individual that is offering a contract for deed, you have to do serious vetting to ensure that there will be no problems with your deal in the future. With C4D, this is not necessary.

Contract for Deed: True Disclosure

When we purchase your home, we get a loan from our bank. With the blessing and full knowledge of our bank, we then sell the property to you with a MN contract for deed. You make your monthly payments to us and we, in turn, make our payment to the bank. But check this out:

We’ve never missed a payment and don’t ever plan on it.  In addition, we’ve worked with our bank partner to have an assignment of contract included in your documents that basically says if we stop paying our lender, you can pay them directly and your contract remains intact.

You won’t find this protection with most individual contract for deed sales. In fact, many times the seller’s bank isn’t even made aware of the transaction, and this can throw the original mortgage into default because of the due on sale clause that is embedded in almost every mortgage note. Our agreements with our bank do not have due on sale clauses.

Everything is upfront and at closing the contract is recorded at the appropriate County.

Helping You Refinance

Our goal is to get you into a home and ultimately help you refinance with a traditional lender.  We have relationships and systems in place to help make this happen. Typically, we can help people refinance within three years of purchase.

For the Realtor: Turned Down? There Is Still Hope!

So you spent weeks trying to get your buyer and seller agree upon a price. Both were difficult at times, and when you finally got all sides to listen to reason, an old unpaid judgment appeared and derailed the financing. After you’re done binge watching House of Cards to ease your pain, give us a call. We have been able to resurrect many deals that have been turned down by others.

Realtor Contract for Deed

We are a reputable, experienced and recognized company that does MN contract for deed. You bring us the buyer and the property, we buy the property and sell it to your client on a contract for deed. Even if you have an iffy buyer with shaky credit and you have not yet found the perfect property, bring them to us; we will get many of them pre-approved and send them back to you.

Is My Commission Protected?

Realtor Commission

You betcha! 80% of our referrals come from realtors, and they wouldn’t keep coming back if we didn’t guarantee that their commissions would be protected.

The Deed

Contract for deed means exactly that.

  • We buy the property.
  • We hold the deed.
  • We sell the property to the buyer.
  • They occupy the home.
  • They make their monthly payments.
  • At the end of the contract period, we turn over the deed and they are homeowners!
  • They can also refinance early with a traditional lender, and this is something that we will facilitate.
  • In addition, the buyer actually has equitable title, and can sell the property at any time if they wish to move on.

What About Financing?

Yes, we use a bank.

  • Our bank gives us a mortgage.
  • Our bank knows what we are doing.
  • The buyer pays us and we pay the bank.
  • We are never late.
  • We never miss payments.
  • Our mortgage with our bank does NOT include a due on sale clause.
  • In fact, we have an assignment of contract put in place that basically says if we stop paying our lender, the buyer can pay them directly and the contract remains intact!

The Final Paperwork

We will hold your client’s hand from application to closing. We will assist with all documentation and paperwork.

When The Offer Is Accepted

At this point, Taylor and the C4D Crew take over.  We work directly with the lender and title company to schedule closing and work out all the paperwork.  The C4D Crew will also work directly with the C4D buyer on all the paperwork and logistics for the day of closing This will be one of the easier transactions you do this year!

Down-Payment

Contract For Deed MN Down Payment

A down-payment is of course necessary, but the down payment be gifted to the buyer in a C4D transaction. Just make sure your clients speak with their accountant for possible tax implications.

C4D Crew Reputation

We can provide you with client references. Just by looking at our website you can see that we provide tons of valuable and free information about MN contract for deed. Of course, we are in business to make money—so are you—but we are also dedicated to helping those with compromised credit become homeowners.

How Long Does It Take?

From the time you and your client find a home they’d like to buy, and an offer is accepted, we can close as quickly as two to three weeks.

Credit Score Minimum?

We don’t have one. We look at every deal individually. Prior BKs, student loans, judgments divorces and tax liens are all issues we can work around.

Credit Score

Can You Approve Any Deal?

In short, no. We are not going to lie and tell you that we can do anything, but you would be amazed at what we can accomplish.

Call Us About Contract For Deed

MN Contract For Deed

Again, just because the loan officer rejected your client’s loan, your deal is not necessarily dead. Contact us and we’ll quickly get started on a contract for deed program that can make your client’s home ownership dream a reality.

Hiring a Team: Benefits and Drawbacks for Realtors

 1000 500 Sam Radbil
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You’ve worked hard to build your real estate team and business, but now you are starting so feel some stress.

When you received just one listing at a time, it was easy to send out instant replies to emails, and you could do a great job taking photos and getting your newly listed homes on MLS very quickly.

Now you have a good amount of business — maybe a couple contract for deed deals have gone through — and even though your spouse helps out, you are finding that you just can’t respond as quickly as you would like to, and you’re worried that your great reputation will suffer if you start missing emails. It may be time to hire a team to assist you, but there are pluses and minuses to consider.

Real Estate Team Plus: You’ll Get Some Help

It’s key to hire a great real estate team as your business grows.

Most small business owners started out with very small or non-existent staff, and you fit right into that category. You respond to every call, you send out every email and you go to every meeting. At a certain point, you just may not be able to handle the work load, and you decide to hire an assistant. If you get lucky and your hire is successful, you can off-load a lot of the mundane tasks that are beginning to slow you down. Just make sure your hire isn’t looking for a way to make 10 dollars fast. You want someone committed. And this much needed relief can make you more relaxed, and you can focus on more upper level tasks. If you don’t have to personally answer every phone call, you’ll have a lot more time to do what you do best.

Real Estate Team Minus: It Won’t Be You

Even if the person you hire has worked with you for many years, you can’t expect a clone of yourself. And if you hire an experienced person, he or she may still do things differently than you would. A warm body may provide some relief in the work-load department, but there is no guarantee that you will be completely satisfied.

real estate team and employee motivation

In the beginning, most small business owners do everything themselves, and if that describes your style, you may not be happy with the emails your new assistant writes, or the way he or she answers the phone. Yes, you can adjust and do more training, but there will always be a difference between your employees and you.

Plus: You Can Handle More Business

If you’re on the edge of disaster because of an extreme workload, you’re not going to be very efficient, and you may spend all of your time trying to catch up rather than prospecting for new clients. Again, by taking some of the load off, your new employee(s) will allow you go to get back into the tasks that made you initially successful.

Minus: You Have to Manage

real estate team management
Managing a real estate team can be stressful.

When you were a true sole proprietor, all you had to do was motivate yourself, and you knew that if didn’t work hard you couldn’t feed your family; that was probably enough to get you out of bed in the morning. When you hire employees, you have to be the motivator, and you may find that it takes a while to find out exactly what you need to do to gain excellence from your staff.

It’s great to be busy, and even more exciting to be at the point where you need to hire a team. Just be ready for the road to be a little bumpy at times.

first time home buyer with bad credit

First Home with Terrible Credit: Is It Possible?

 1000 500 Sam Radbil
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Getting your first apartment, whether that’s a studio in Milwaukee, Wisconsin or a 2-bedroom place in Minneapolis, and moving out of your parents’ house is great, but when you get married and start a family, you’ll want your own home. If you have a great job and a stellar credit history, you might sail right through the loan process but what if you have terrible credit? Bad credit does happen to good people and here a few reasons why, if you are a first time home buyer with bad credit that you may be having difficulties getting loan approval:

  • Divorce
  • Job loss
  • Over use of credit cards
  • High student loan balances
  • Judgments
  • Liens
  • Arrests
  • Tax warrants
  • Bankruptcy

Miss a payment here and there and your credit rating can take a huge hit, and if you have to declare bankruptcy, your credit score can instantly drop 100 – 150 points or more. If something bad has occurred, does that mean you can never buy a home? The simple answer is that no, you may be able to purchase a home, but it will take some work.

Check Your Scores

Credit score

First, don’t enter the battle without ammunition. Make sure you know what your credit score is, and also examine your credit report for errors. The Federal Trade Commission reported that “One of every five American consumers has an error on his or her credit report and 5 percent of us endure errors so serious that we likely are being overcharged for credit card debts, auto loans, insurance policies and other financial obligations, according to a comprehensive study issued … by federal regulators.” A simple late payment error can take your score down by 30 points so if you see errors, dispute them.

Raise Your Limits

A large portion of your credit score consists of your credit usage ratio. If you have $10,000 in various credit lines and have balances that equal $4500, your usage rate will be 45 percent. Your credit score will be higher if you can keep the ratio below 33 percent. One easy way to lower that ratio without paying down your cards is to get a credit line increase. Increase your $10,000 lines to $15,000,you’re your $4500 usage will yield a 30 percent rate, and that will raise your score.

Trouble as a First Time Home Buyer with Bad Credit

If your score is still ugly, and you are having problems get approved for a loan, look to government programs. If you are a veteran, you can get a VA guaranteed loan for your first-time home purchase. This is a great way for a first-time homeowner with bad credit to get a loan even with a credit score in the mid-500s. FHA loans are another avenue to pursue if you have credit issues.

Rising Interest Rates Loan Rejection

Contract for Deed

Many persons, however, just can’t qualify for conventional financing, and this is where a contract for deed might work for you. Find a reputable company like C4D. They will but the home you are interested in and then sell it to you with a MN contract for deed. You can live in the home, and after you have made all of your payments, you will own your home.

It sounds simple, and while you still have to qualify, companies like C4D look at more than your credit score. If you are a first-time home buyer with bad credit, check all of your options, but be sure to add contract for deed to the list.

Home Buying in 2019

Buy in 2019? 7 Must-Do’s Before Homeownership

 1000 500 Sam Radbil
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Buying your first home can be an exhilarating but exhausting experience. Before you even worry about the ins and outs of finding a great plumber, you not only have to find the place you want, but you must get your financial life in order in a hurry if you haven’t done that already. Here are seven important things to do before you purchase your first home:

Get A Realtor to Represent You

buying your first home

Important technical point #1: Sellers pay all real estate commissions, including those of a buyer’s agent. You should find the best and most knowledgeable real estate professional in your area and sign them up to represent you. They will flood your inbox with listings, they will help you negotiate, and they will draft purchase offers. And you won’t have to pay a penny, so there is no reason to purchase a home without the help of a buyer’s agent.

Look at Your Budget

Understand what you can afford and what you can’t. Principal and interest aren’t the only components of a monthly payment. You have to add real estate taxes, property insurance and maybe even private mortgage insurance (PMI) to the equation. You can’t start the process of buying your first home without understanding exactly where to draw the affordability line as there is no sense in wasting time looking at properties you can’t afford.

Credit score

Buying Your First Home: Get Your Credit Score

A few years ago, you had to pay for your credit score, but not anymore. Today, there are many vendors and credit card companies that will provide your score in seconds. If you have a low score, research what you can do to improve it, as your credit score is the first thing lenders look at.

Seek Pre-approval

While pre-approval from a lender does not necessarily guarantee that you will get a loan, it does give sellers assurance that you are creditworthy. When a seller accepts your offer, they are tying up their property until the deal closes, and if you are not a good risk, sellers will look at other offers.

Gather Your Down Payment Resources

Down Payment Resources

Substantial down payments can work magic because:

  • They lower your monthly payment amount.
  • They show the lender you are committed and serious.
  • They show the seller that you have resources.

Yes, you can but a home with no down payment—a VA loan is one example—but your financing options may be limited, and your interest rate could be higher.

Don’t Fear the Inspection

When buying your first home, you will want to have the property inspected by an impartial third party after your offer is accepted. Many persons worry that the inspector will find something bad and the deal will die. Some deals need to be killed, however, especially if an inspector finds glaring defects and problems. Your dream home can quickly become your nightmare if you don’t have it properly inspected while you still can void your purchase contract.

Have a Contingency Plan

If a deal falls through, or if you are turned down for a mortgage, it’s not the end of the world. There are other homes out there and other financing methods available. MN contract for deed is a great way for those with some credit issues to participate in home ownership. Be sure to contact us if you need an alternative to traditional financing.

The Major Tax Benefits of Homeownership in 2019

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Home ownership is still a great deal, and you can save substantial tax dollars because of it. In 2019, however, some of the benefits of home ownership have been curtailed, and those interested in exactly what a homeownership tax credit does should read on.

What is a Tax Deduction?

There is a difference between tax deductions and tax credits. A tax deduction is an amount that you can subtract from your gross income. In previous years, the IRS allowed what they call the standard deduction; that was $12,000 per year per married couple.

That meant if you earned $60,000 in 2018, and were filing jointly, you would be about to immediately deduct $12,000 from your income and pay taxes only on the remaining $48,000.

homeownership tax credit and deductions

An image of a Five Most Common Tax Deductions Chart.

For the tax year 2018, the standard deduction has been increased to $24,000. That means that on a combined income of $60,000, you and your spouse could deduct $24,000 and pay taxes only on $36,000.

The caveat here is that you can either take the standard deduction, or you can itemize expenses, add those up, and use that amount as your deduction. The purpose of doubling the standard deduction was to keep people from having to itemize and save receipts.

What Is a Tax Credit?

A tax credit is something that would actually reduce the amount of taxes that you owe, like the American Opportunity tax credit that applies to attending college.

Capital Gains Tax

There is not a national homeownership tax credit per se. Yes, you can deduct a certain amount of mortgage interest and property taxes, but it may be more advantageous to just take the new higher standard deduction. The mortgage deduction amount for the year 2019 has been capped, and so has the property tax deduction amount.

IRA Considerations

If you are considering the use of your IRA to fund a down payment, tax laws do allow you to forego paying IRA withdrawal taxes up to a certain amount. Be sure to check with your CPA regarding this.

Home Equity Interest Loan Deduction

Again, this is not a homeownership tax credit, but you can deduct a certain amount of home equity loan interest if you have taken out a home equity loan.

Capital Gains Exclusion

Capital Gains Exclusion

Our friends at NOLO tell us:

“Married taxpayers who file jointly get to keep, tax free, up to $500,000 in profit on the sale of a home used as a principal residence for two of the prior five years. Single folks (including home co-owners if they separately qualify) and married taxpayers who file separately get to keep up to $250,000 each, tax free.”

The Comparison

Remember, if you are renting, there are no possibilities for mortgage or property tax interest deductions, and you can’t take out a home equity loan so that deduction will be unavailable also. There are certain states that offer a homeownership tax credit, and renters from Bloomington, Indiana to Eugene, Oregon are out of luck here also.

As you can see, home ownership still provides a lot of tax incentives, and states provide worthwhile homeownership tax credit. If you are unable to get traditional financing, these tax breaks can still be yours through the use of MN contract for deed.

Life After Bankruptcy

Life After Bankruptcy: 6 Ways to Get Back on Track

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Bankruptcy used to be considered the financial death penalty, but times have changed. While many people worry about life after bankruptcy, the future after filing Chapter 7 is not necessarily bleak.

Life After BankruptcyBankruptcy – What Is It?

There are two types of commonly filed individual bankruptcies—Chapter 7 and Chapter 13. Chapter 7 is a liquidation process where certain assets are given to a trustee that sells them in order to pay off creditors.

Chapter 13 was designed for those that wish to pay their debts but need time. A person that files for Chapter 13 bankruptcy works out a plan to make monthly payments to a trustee; the trustee then makes payments to creditors for a three or five-year period. After that time has passes and all payments have been made, certain remaining debt amounts may be cancelled.

Credit Score After Chapter 7

Credit Score after Bankruptcy

The better your credit score is, the more your credit score will decline. Credit scores average around 540 after bankruptcy, so if yours was 750, it will fall a lot further than if it was at 640 before bankruptcy. The good news is that many debts will be discharged—taxes, student loans, child support and some others won’t go away—and you will be able to start fresh. If you are still employed, or if you get a new job, your monthly expenses will be less, and you may even be able to start saving money, especially if you’re bringing in some money through passive income ideas.

Get a Secured Credit Card

If you declare Chapter 7, all of your credit cards may be cancelled regardless of their balances. Soon after your bankruptcy has been discharged, however, you will receive secured credit card offers. Put $500 in a secured account, and you will be rewarded with $500 of fresh credit.

*Note: although it might not be a ton of money, you can also check out using some apps that pay. You never know what a few extra dollars can do for a bank account each month.

You Still Have a Debit Card

Even if you have to open a new bank account, you can get a debit card. You can use it virtually anywhere you can use a credit card, so if you need to buy a plane ticket, you will be able to. Before debit cards became popular, people did have issues paying for items that required a card number, but that’s no longer the case.

You Can Even Get a Car

If you have file for Chapter 7 bankruptcy you cannot file again for eight years. Since you can’t file, you are actually somewhat of a better credit risk, and as time passes you will actually be able to borrow normally for items like appliances and autos.

Think Cosigner

FICO Score

If you have immediate financial needs and you have to borrow, try to get a cosigner. That person will be absolutely responsible for your debt, but if you make all of the payments on time, there will be no harm to the cosigner.

Life After Bankruptcy: Go Back to School

If you haven’t availed yourself of the Federal Student Loan program, you can go to a post-secondary institution for a bachelor or master’s degree or you could even go to law school or enter a PhD program. Federal student loans are available for all citizens—unless you are a drug offender—and there is no credit check required. If you take six credits at a major university, you can have all of your tuition paid and even receive some extra money you can use for expenses.

Back to School

Yes, there is life after bankruptcy. Borrowing for a home will be more difficult, but the financing pros at C4D can help with these types of issues. Be sure to contact us for more information.

Contract for Deed Homes: What Realtors NEED To Know

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There are a number of reasons Minnesota residents looking to buy contract for deed homes have had success. But you might ask: why not just buy your home with a traditional mortgage from the bank? Let’s talk about that.

We’ve all had it happen. 

Loan Rejection

After a difficult and protracted negotiation period, you finally got both your buyer and the seller to agree on price, contingencies, and before-closing repairs. At the end, everyone came to their senses, gave a up a little, and all parties were looking forward to closing.

Then the bank stepped in and killed the deal. Even though your buyer was pre-qualified, they made a mistake, didn’t follow your instructions and decided to finance an expensive vehicle. As the bank did a final credit check, the new car loan appeared and skewed the buyer’s debt to income ratio. The deal was dead, but you could have brought it back to life.

Contract for Deed Homes

Image result for home buying process

Contract for deed is a widely accepted Minnesota financing tool where a seller finances the property purchase on an installment basis, and they buyer receives the deed upon making the final payment. Many think that for this to work they need to find free and clear properties where a seller agrees to be the bank.

Why free and clear?

Because sellers can’t usually sell encumbered properties without breaching the lender’s mortgage contract. Therefore, those interested in contract for deed financing look specifically for contract for deed homes. There is another way, however.

Companies Like the Contract for Deed Crew (Yes, that’s us!)

There are quality companies out there like C4D, and it works like this: You bring a deal to C4D. Like a bank, C4D analyzes the deal to ensure that the seller can make the required monthly payments.

Unlike a bank, however, C4D can look past problems like the vehicle purchase mentioned above. With a good contract for deed homes company, you will be dealing with the company owner—not a bureaucratic bank loan officer. If C4D approves the deal, they will buy the property.

They do this with a bank loan, but the company’s bank does not include a due-upon-sale clause in its mortgage to C4D. Therefore, C4D legally and ethically buys the home, and with the bank’s blessing, C4D sells it on a contract for deed to the buyer.

Contract for Deed Homes

Benefits to the Realtor using Contract for Deed

  • You can explain difficult situations to C4D and they will understand. A debt to income ratio that has recently changed can be worked with if the buyers can legitimately afford the home.
  • Contract for deed revives dead deals. Banks can be arbitrary and unforgiving, but with a contract for deed transaction, the seller has more leeway to analyze what really makes the buyer worthy.
  • While a down payment is needed, the actual percentage is not necessarily set, and there are even ways the contract for deed companies can facilitate payment assistance.
  • Buyers can look at any home—not just contract for deed homes. With a MN contract for deed sale, the seller is unaffected since a company like C4D is the only purchaser they need to deal with.
  • All real estate commissions are protected.
  • Sellers can move their homes more expediently because companies like C4D have lots of buyers waiting for their dream homes.

Also, if you’re looking to understand property value event more, check out this presentation:

Presentation courtesy of LoseTheAgent, a listing platform for homes for sale by owner.

Don’t let loan officers and finicky banks get in your way. Consider using MN contract for deed for any deal where the lender is causing you trouble. It’s worth an email!