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Actionable Tips For First Time Home Buyers in 2018

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Whew! It seems everything has accelerated in the past couple of years. You graduated from college, got married, landed a nice job, and now there is a child on the way. Your apartment in Chicago on the 32nd floor is just not going to do it anymore, so it’ s time to think about purchasing your first home. Where to even start? Well, how about starting right here. Here are some great tips for first time home buyers.

Tips for First Time Home Buyers: Your Realtor

First Time Homebuyer Broker

Establish a relationship with a buyer’s agent. You’re looking to your agent for tips for first time home buyers, so after you explain your needs and price range, this person will find properties for you to view, make the appointments, keep a record of what you have seen, negotiate deals and write up offers to purchase. And guess what, there is no cost to you, since the seller pays all commission expenses!

Next Tip: Clean Up Your Credit History

Bad MN credit can be a problem as it can injure your ability to get good bank financing at the lowest possible rate. Go to Credit Karma, look at your credit score, view your credit report, and dispute any errors you find.

Tip #3: Pay Down Those Cards

As any Minnesota mortgage lender will tell you, if you have a high credit utilization rate, your projected monthly mortgage payment will be higher. Savvy first time home buyers plan well in advance to reduce credit card balances.

Tip #4: Work on Those Student Loans

As Student Loan Hero tells us:

“Spending a few more years getting your student loans or other debts paid down could mean that you would qualify for a lower interest rate or a higher loan amount. Once you have a better credit history and more secure income history, you will have more options available when you finally are ready to take that leap into homeownership.”

Become aware of the many repayment options available to MN student loan holders, and strengthen your monthly cash flow.

Tips for First Time Home Buyers - Student Loans

First Time Home Buyer Tip #5: Save for that Down Payment

You will be asked to show that you have anywhere from three to ten percent or more down-payment money available. While some lenders allow you to accept this money as a gift from your relatives, others like to see that you have saved it. Few lenders, however, will accept a borrowed down payment. You can also look into something like a home improvement loan as well.

Tip #6: Be Realistic and Discerning

Our friends at U.S. News tell us:

“When you look at houses, focus on the right things. Don’t be distracted by the owner’s odd décor, paint colors, dirty carpet or anything that is easy to change. Granite countertops and stainless-steel appliances are easy to add later. You can’t easily add another bedroom, a better location or a more functional floor plan.”

Tip #7: Be Serious and Ready to Go

Don’t casually look for houses without having a plan to move if you find your dream house. You could find a gem on day one, but be stuck for six months in an apartment lease. Great opportunities may present themselves fleetingly, and you need to be ready. But be prepared to take some time to shop around for home insurance — don’t forget about this!

Tip #8: Check Out the Neighborhood at Different Times of Day

That nice, quiet three-bedroom dream home may turn out to be a nightmare if you only saw it on a quiet Sunday afternoon. Check traffic patterns and activity at different times before you make an offer.

Tip #9: Talk to the Neighbors

Homebuying Neighbors

No one can give you a more realistic view of the area than someone that has lived there for years. Knock on doors, talk to people you see, and frankly ask them if the neighborhood is a good place to live. You’d be surprised at the genuine answers you will receive.

Be sure you check in on the home and neighborhood safety as well. You don’t want to become just “another statistic.”

Final First Time Home Buyer Tip: Don’t Give Up

If you have found your dream home, but have been turned down for conventional financing, there are alternatives. C4D, our company that specializes in helping those with bad credit in Minnesota, may be able to help you find your path to home ownership through a contract for deed. Go here to find out more about this legitimate and widely used method that can get you into a home even if you have credit issues.

And if you’re looking for even more tips for first time home buyers, you can check out some more great information from our friends over at Bankrate. They have a fantastic blog post which shares many more tips for first time home buyers. You can check it out here.

The American Dream: Immigrant Homeownership

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The housing market needs immigrants, and the gap between native-born and immigrant homeowners has been shrinking for several years. But housing for immigrants is a tough subject to navigate. And the biggest question is … is it possible for more immigrants to become homeowners in 2018?

There are many ways to enter the U.S. legally. For example, student visas are relatively easy to get if you are enrolled in a US educational institution. Since foreign tuition rates may be higher, many universities recruit foreign students and will actually help them receive visas.

If you are a non- US citizen starting a business and you plan to invest money in it and therefore create American jobs, there are visas available. You can get a visitor’s visa–for vacation purposes–or you can apply for an immigrant visa. You may be able to get a green card that allows you to work in the US. If you do remain in this country after your visa has expired, however, you become undocumented, and that can lead to difficulties.

I’m Staying Here Anyway

Whether you have a green card, a student visa, a business or professional visa, or whether you may be here illegally, you may decide that you want to buy a house. Maybe you’re tired of renting, are pretty sure that you are not going to have legal trouble if you stay, and like most Americans, you want to build future equity. You may have read that even financially secure US citizens may have trouble getting mortgages. If that’s the case, should you as a non-US citizen even consider buying a house, and furthermore, can you even do it?

Yes! It Can Be Done

President Trump’s failed university offered this advice to its students in a 2010 blog brought to us by The Weekly Standard.

“First of all, you do not have to have a social security number to buy or sell a home in the U.S. Some mortgage lenders require one; however, there is not a law requiring one. You do need to have some form of government issued identification, even if it is from another country (such as a passport or driver’s license).

Those without a social security number will need an ITIN (individual taxpayer identification number) number which is issued by the IRS to foreign nationals for paying taxes on money they earn in the U.S. (The author) noted that while it is difficult for illegal immigrants to get mortgage loans, several banks have programs designed for those immigrants. ‘Lastly, it is not illegal to own real estate in the U.S. even if one is in the country illegally,’ she wrote. ‘If getting a mortgage is not an option, one can always pay cash.’”

Housing for Immigrants

Problems That Can Arise If You Don’t Have the Cash

While a cash purchase may be completely legal, obtaining a mortgage–if you don’t have the cash–can be difficult for the following reasons:

  • Hard to prove foreign income.
  • Banks may not believe your foreign accountant.
  • Lenders may fear that you will be deported.
  • Thin credit or no credit history.
  • Bad credit MN.
  • No ITIN or SSN.
  • Low credit score.
  • Other legal issues.
  • Massive student loan debt.

Immigrant Housing No Cash

Housing for Immigrants: What Now?

So, you’re here, you’ve found a great home, you have a job, you can afford a modest mortgage payment but you just can’t convince a lender to take that risk and allow you to become a homeowner. Now is the time to think non-traditional financing. With a contract for deed, you can pay for your home on installments, and after you have completed all of your payments, you will own the property. These transactions can be accomplished by two willing parties without concern of bank denial. There are even reputable Minnesota lenders like C4D that can help you do this.

Rent-To-Own

Contract for deed’s cousin, rent-to-own might also be a viable option. NOLO says, “A rent-to-own agreement is made up of two agreements: a standard lease agreement, and an option to purchase; these may be incorporated in one document or two separate documents.” In this scenario, a portion of your rent goes toward a down-payment that you can use to obtain future financing.

Rent To Own for Immigrants

Exotic and Risky?

Don’t let a conservative banker derail your plans for home ownership. Of course, alternative home financing plans can be costlier and have some inherent risks. Didn’t you take a risk, however, when you came to the US in the first place?

Just Do It

As we have shown, they are ways to purchase a home even if you’re not a US citizen. Make sure you understand all of the options available to you and start with a bank or mortgage broker, and if that doesn’t work, consider MN contract for deed or rent to own, even if you have bad credit or immigration issues.

For more immigrant housing resources, view the links below:

Should I Buy A House?

Are You (Actually) Ready To Buy A House?

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Should I buy a house? This is the question that almost every 20- or 30-year-old must answer at some point in time. But are you getting terrible advice from parents and friends? Or do they actually know what they’re talking about? But is buying what’s best for you individually? There are so many questions to answer.

And to add to the endless questions, your parents did it, your friends and co-workers are doing it, everyone says it’s the American dream, but buying a home is a major obligation, and while there are great reasons for joining the club, there are equally important reasons for waiting.

Let’s first look at the top five reasons you should NOT buy your first home just yet:

Should I Buy A House?

Why You Should NOT Buy

  1. Everyone is telling you to do it

Just because you just got married, graduated from college, got a great job or turned 30 doesn’t mean that you automatically need to buy a home. Individual circumstances are always different, and don’t take the home ownership path just because someone else tells you it’s time to do it.

  1. You got a new job and must move

It can be stressful to suddenly find out that you have to move because of employment changes. Still, that’s not a good reason to think you have to immediately re-create your present living circumstances by buying a house. Those that quickly buy houses in an unfamiliar city sometimes find out that if they would have waited, they would have chosen a different neighborhood. Furthermore, if you think you may be transferred again within the next five years, renting may be a better option.

  1. You got pre-qualified for a mortgage

Don’t borrow money just because you can. If you qualify for a mortgage today and are financially prudent, you will probably qualify in the future without much difficulty. While mortgage qualification is paramount, it should never be the only reason to purchase a home.

  1. You are loaded with debt

 Millennial Debt

*Check out how many Millennials are NOT buying homes because of debt!

If you are just getting by and carry large credit card balances, high-payment car loans and a lot of student loan debt, you may want to make sure that you can afford a mortgage payment + taxes + insurance + maintenance + furnishings. If you can’t, then wait until you can.

  1. You found a fixer-upper!

Too much HGTV may be bad for your financial health. While it’s fun to watch the Property Brothers fight through yet another renovation, reality TV sometimes skips a lot of steps and if find out you need a supporting beam and don’t have $10,000 to pay for the work, you might have been better off renting.

OK, so that takes care of the reasons not to but a home; now look at these reasons to jump into home ownership:

Why You Should Buy

Buying A Home

  1. You are finally ready

If you have saved a downpayment, your overall debt situation is good, you don’t like giving the landlord money every month with no return for you, and you really like cutting the grass, you might be ready to buy a home.

  1. You want to build equity

Go to bankrate.com and calculate an amortization schedule. Even though your equity may be slow to build, a portion of every mortgage payment will go toward your principal balance. A 30 year mortgage means just that—after 30 years you will own your home and your mortgage will be gone.

  1. You’re in control at work

You know when you have job security and also when things may be tenuous. If the future looks great, you have one less thing to worry about, and it may be the right time to become a homeowner.

  1. Mortgage interest deduction

Even though the latest tax bill dinged the mortgage interest deduction for the rich and famous, you can still benefit if you itemize deductions. Remember however, that the standard deduction has been significantly increased, so talk to your accountant about this one. Ask about property tax deductions also.

  1. We fear change

Home ownership takes a big “what if” out of the picture. As long as you make your payments, you can stay in your home. If you rent, you could be facing a different situation at lease-end, or if, for example, your apartment building is sold. Homeownership brings needed stability as it’s great knowing that you are in control.

But Wait — You Have Options!

Remember, bank mortgages aren’t the only way to finance homes. There are rent-to-own plans and better yet, MN contract for deed situations available. Alternative and non-traditional financing are two great paths to homeownership, so if you do have bad credit, large student loan balances, judgments, levies or just general bad credit, find a company like C4D that can help you.

Real Estate Blogs

19 Amazing Real Estate Blogs To Follow In 2018

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The real estate industry has changed a lot over the last decade. New technologies have impacted the industry in a huge way. It’s hugely important to keep up with new technology, consumer psychology and other innovations that change the way real estate agents do the job. A great way to stay in tune with the industry is to consistently read the top real estate blogs of 2018.

Whether your customer base is primarily young professionals, millennials, baby boomers or even retirees, it’s critically important for you to be aware of what’s happening in your ever-changing market. These sites can help you stay informed and communicate more efficiently with your clients:

National Blogs

Inman

Inman is a techy blog that also has some great stories about Realtors’ experiences in the field. In addition, it has a great pop-up that links to valuable 2018 market predictions.

Bigger Pockets

This site is more entrepreneurial and features articles about real estate investment like, “10 Lethal Mistakes to Avoid on Your First Real Estate Investment.” If you have clients that are considering flipping properties, Bigger Pockets a nice place to send them.

Redfin

Redfin is a traditional web real estate portal like Trulia, but unlike others, Redfin also makes money as a real estate brokerage. Even though you might consider them a competitor, it’s certainly valuable to see what they are doing. This site is like the CNN of standard big real estate sites, and is full of varied information.

Realtor.com

While Redfin’s site may look like CNN, the one is similar to MSN, with generic and wide-ranging articles like “Pending-Home Sales Tumble to a 3-Year Low as Housing ‘Crisis’ Worsens.” This site is more newsy than bloggy.

REwired

Rewired describes itself as “open commentary on everything impacting the U.S. housing economy.”

Here you will find articles ranging from the history of property valuation to the extent that high student loan debt is affecting mortgage qualification rates. Lots of more in-depth blogs here.

Bankrate News

Bankrate was one of the first, and is still the go-to site for many that are looking for a wide variety of loan rate calculators. It also boasts a good section that covers straight real estate financing news in a no-frills manner.

Geek Estate

This site claims that they “analyze Real Estate Technology and trends, and provide advice for tech savvy agents, brokers, technology vendors, consultants, and entrepreneurs.” We would definitely agree, and if you lean to the tech side, or just want to know how to begin to upgrade your business systems, Geek Estate provides great info.

REtipster

Investor Seth Williams says that his site will show you how to make money in real estate with less risk and more personal free time. If that isn’t the best of all worlds, what is? Worth a look, though.

RISmedia

Rismedia’s real estate site features news, blogs, advice, and some good general information. Not our favorite for cutting edge info, but still a good place for general guidance with an abundance of varied articles.

Rentec Direct

While this site focuses on landlords and their tenant issues, it also addresses tenant concerns like “What to do if you are facing eviction.” If any of your clients are landlords or want to ascertain the real costs of renting a property, this is a good place to start.

Agent Image

Agent Image is a real estate web development site. As you know, it’s critical to have an easily readable, modern and up-to-date site, and Agent Image will get you there. There are also blogging and SEO guidelines here.

Property Shark

Property Shark deals with high end properties in luxury destinations. Sample articles outline the 10 most pricey US zip codes, and if you have any interest in the upscale market anywhere in the US, this site is for you.

Realty Times

Realty Times is a nice general real estate newsletter with lots of agent tips and advice. It includes a useful local market outlook section and is easy to navigate.

Local Blogs

Minnesota Real Estate Journal

If you are familiar with your city’s local business journal, you’ll like what you find here: Local news, features, trends and advice all presented in a business-friendly manner. You’ll find all of the latest Minnesota property development news here.

MPLS Realtor

This is the Minneapolis Area Association of Realtors’ site, and is loaded with membership news, education opportunities, and market research. This is an excellent place to visit at least once a week as you keep abreast of major trend changes.

Minneapolis / St. Paul Business Journal

Local business journals are usually real estate intense, and this one is no different. You can find a few breaking real estate news articles every week, along with information about the top agents and where they are currently working. Their Top 25 lists are invaluable marketing tools.

Homes MSP

Homes MSP is a ReMax site. That said, there is some good information there—especially if you want some new recipes (!) Anyway, if you have some extra time, take a look.

REjournals

They say they are “the midwest’s leading source for real estate news.” No too many informational blogs, but there is a nicely updated Midwest real estate market section.

MN Property Group

This is another Remax site with listings interspersed with some worthwhile posts. You do need to check the pulse of the local market, and looking at sites like this will give you insight into what’s happening.

That’s a lot of reading, and we know you’re undoubtedly busy, but be sure to spend some quality self-education time adding to your cumulative local and national market knowledge.

For additional blog posts (new posts every Monday) from the C4D Crew, check out this page.

Bad Credit Score Home Financing

Buying A Home With Bad Credit: Is It Possible?

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Buying a home with bad credit can be virtually impossible for some people. And if you’re a person who is impacted by a terrible credit score (reasons below), then renting a home or apartment may seem like a great idea.

You’ll have no taxes, no maintenance, no real long-term commitments, and you won’t be stuck with a property you don’t want if you decide to move. But when you realize that your monthly rent payment is just like a car lease payment with none of it applying to equity, you may decide it’s time to become a homeowner. If your credit score is low, and you are unable to qualify for a mortgage, then you you may want to look at non-traditional financing.

Here are some reasons that you might not qualify for a mortgage loan:

  • you have delinquent student loans,
  • overdue credit cards,
  • late auto payments, or
  • bad Minnesota credit.

And just take a quick glance at this chart and you’ll see why student loans are such a HUGE issue.

Buying A Home with Bad Credit - Student Loans

If this is the case for you, and you truly are serious about buying a home with bad credit, then check out these methods to buy your dream home:

Get Someone to Buy It for You

If you’re lucky enough to have a rich uncle, maybe he or she will purchase the property for you and put your name on the deed. You could make the mortgage payments and start building equity.

Work on Your Credit Score

Buying A Home With Bad Credit - Your Score

Alternative financing for people who take aim at buying a home with bad credit is sometimes necessary because your credit report is incorrect. Avoid the necessity of finding MN bad credit financing by obtaining your credit report at Credit Karma and following the proper procedures for correcting errors. The folks at myFICO say:

“It’s important to note that repairing bad credit is a bit like losing weight: It takes time and there is no quick way to fix a credit score. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. The best advice for rebuilding credit is to manage it responsibly over time. If you haven’t done that, then you need to repair your credit history before you see credit score improvement.”

Do a Rent to Own

In a rent to own transaction, those looking for MN bad credit loans can purchase a home by entering into a rent to own agreement. With a very small deposit, renters can arrange for a portion of their monthly rent payments to be put toward a down payment or a reduction in the final home selling price. These transactions are complicated, however, and it’s important to gain legal representation before signing any rent to own contract.

Get a Private Mortgage

You don’t have to get a mortgage from a bank; anyone can lend you the funds. Maybe your boss, a relative or a private lender would be willing to help. You could offer to pay a higher interest rate or could offer to pay an origination fee.

Buying A Home With Bad Credit? GO FHA

Even with a low credit score, FHA loans can still be a possibility:

FICO Credit Score

These can be obtained through any participating mortgage lender. Even if you have a previous foreclosure or bankruptcy, FHA federally guaranteed loans can be a great option.

Get a Contract for Deed Deal

Minnesota contract for deed loans are commonplace. In this scenario you first find a property for sale by owner. Then, have the owner agree to sell you the property on a contract. While many contract for deed sales are straightforward, legal representation is very important here, because a sale of property already encumbered by tax liens and/or judgments, for example, can cause you big trouble.

A Great Place to Find Help

C4D is a well-respected and established company that helps Minnesota home buyers with bad credit through the process of becoming a homeowner. While there are other agencies and companies that will assist, C4D is directly plugged in to the MN contract for deed network. Maybe think about contacting us while you search for bad credit financing.

Rent to Own House in Minnesota

Rent to Own vs. Contract for Deed

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So you want to buy a house in Minnesota? You don’t want to do a rent to own deal or use some method of
“non-traditional financing.” In that case, it should be as easy as the steps below, right?

  1. Go to the bank
  2. Talk to a respectful and trusting loan officer
  3. Fill out some documents
  4. Prove income
  5. Walk out with an approval for a $500,000 mortgage with low rates like the ones shown in this chart:

Unfortunately, however, that privilege is many times reserved for those with stellar credit, while others with the following issues may have to look elsewhere:

  • Low credit score
  • Judgments
  • Garnishments
  • Divorce
  • Self-employment
  • Tax liens
  • Low debt/income ratio
  • Job loss
  • Unverified income
  • High student loan balances
  • Delinquent credit cards

Luckily, there are alternative financing methods (since renting might not be your best option as Minneapolis rent prices are skyrocketing) like rent to own and contract for deed. With new residential sales still on the upswing as shown in the chart below, non-traditional mortgage products are very popular.

Median Home Price

How Rent to Own Works

Rent To Own Details

In a rent to own scenario, you first find your house, and if the owner agrees to enter into this type of non-traditional financing, you agree to a monthly rental amount, and pay a small up-front option fee that gives you the right to buy the home within a certain time period—usually no longer than three years. It is important to have a least a portion of your rent credited to the purchase price. So, if your rent is $1000 per month, for example, try to have at least $800 of your monthly payment applied to the purchase price of the house. Of course, the purchase price should be agreed upon ahead of time, and all of these components should be outlined in your Minnesota rent to own agreement.

The Advantages

  • Your rent money is going toward equity.
  • You have a fixed price for the eventual purchase.
  • You aren’t responsible for property taxes, and possibly not for maintenance.
  • You are locked in to more than a one-year lease.
  • You don’t need to learn the items on a mortgage loan estimate (LE)

The Disadvantages

  • You will have to find financing at the end of the lease term.
  • You could lose your option money if you can’t obtain a loan.
  • If you and the seller have over-estimated the home’s value, you could be underwater at the end of the rental term.
  • The property could be encumbered by liens you aren’t aware of.
  • If you don’t finish the deal your option money will be lost.
  • If you miss a payment, the entire deal can be voided.

Contract for Deed

Many who seek alternative financing turn to MN contract for deed instead. With this process, you have an actual contract to purchase the property at a fixed price. As the Minnesota Federal Reserve has said,

“In a contract for deed sale, the buyer agrees to pay the purchase price of the property in monthly installments. The buyer immediately takes possession of the property, often paying little or nothing down, while the seller retains the legal title to the property until the contract is fulfilled.”

Minnesota is and has been a leader in the utilization of contract for deed instruments for those that need bad credit financing. The process is well-regulated and recognized by many as an efficient and reasonable home financing method for those with special credit situations. In contract for deed:

  • Your payment is not rent–it goes toward the home purchase.
  • You have no option money on the table to lose.
  • Your contract term can be longer than a rent to own agreement.
  • You have home financing at a fixed interest rate.

Minneapolis Federal Reserve

But Wait — Minnesota Is The Leader

If an unscrupulous owner sells a property that is already encumbered with liens, that can be a problem. In addition, if an owner files for bankruptcy during the contract for deed term, this can cause serious difficulties.

The Solution

A great way to avoid the pitfalls of both rent to own and Minnesota contract for deed is to deal with a reputable seller. While there are well-intentioned sellers in the contract for deed arena, companies like C4D take the process a step further as they are in the business of ensuring that the financing process is equitable, legal and fair. And, of course, never enter into any financing transaction without consulting with your attorney.

Are Realtors Losing Money on Seller-Financed Deals?

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You have a quality lead on a new listing, but you get some news  — it’s going to be seller-financed. Now what? Can you still get real estate commission? Is it going to be 6 percent? Should you even bother with clients like this?

Well, if you’re a Minnesota Realtor then you know all there is to possibly know about Minnesota real estate commission, right? And you know all there is to know about seller-financed commission, right? Well, if not, here’s what you absolutely need to know.

First off, let’s face it, good Minnesota real estate professionals just do not give up on deals because of bank denials. Rejections occur for many reasons (just take a peek at the chart below):

  • High student loan balances.
  • Low credit score.
  • Divorce
  • Job change.
  • MN bad credit.
  • Recent foreclosure.
  • Bad debt/income ratio.
  • Tax liens and judgments.
  • Arbitrary loan officers.
  • Inability to prove income.
  • Small business ownership.

Minnesota Realtor Commission

If your client was denied by Bank of America, for example, hopefully you keep working the deal even though a credit union or a community bank also gives the thumbs down. In situations like these, trying to find homes for sale by owner and working a MN contract for deed sale might be the answer. While you may be hesitant to enter the subprime financing arena, there are many well-intentioned potential homeowners with bad credit that just need a way to buy a home.

Sub Prime Mortgages

Homegates states that a contract for deed lets buyers purchase a home without a mortgage. When a buyer and seller sign a contract for deed or contract for sale, the buyer agrees to pay for the property in installments. The seller retains the deed–the document that transfers title–until the buyer has fulfilled the contract by making the final payment.

Serious Commission Issues

Commission for Real Estate

OK, you found a seller that will agree to a contract for deed transaction. Of course, you now need to make sure that the property is not encumbered by liens or other mortgages, and a title search will accomplish this. After all due diligence has been completed, an attorney should draft the Minnesota contract for deed documents.

You’re Not Done Yet

In a traditionally financed real estate transaction, the Realtor’s commission is protected, and will be paid from the sale proceeds. In a contract for deed transaction, however, disputes can arise as to who is responsible for paying broker commissions. The seller may say, “I’m not paying real estate commissions to anyone. I never signed any agreements that obligated me to do so.” The buyer may state, “Commissions have to come from the seller. I have enough problems already; I’m probably paying a subprime interest rate to get this deal done, and I can’t afford any more expenses.”

What Is The Buzz?

A recent Trulia FAQ page offered this advice:

“Here’s a solution: Don’t act in the capacity of an agent (meaning you are not representing buyer or seller… just yourself). Calculate the equity in the home. Negotiate a price that leaves you (buyer #1) some equity. Draft up an assignable purchase agreement for the negotiated price. Assign the agreement to buyer #2 for a certain percentage of the purchase price. There’s your payment… now walk away.”

If that seems complicated, you’re right. A better way to protect your real estate commission is to be transparent when submitting a contract for deed transaction to the seller. Let the seller know that the deal should work like any traditional financing scenario where broker commissions are protected. Reasonable sellers should realize that real estate commissions are paid in most transactions.

Ensure That You Receive Your Commission

In some cases, reasonableness just does not apply, but luckily there are some reputable Minnesota contract for deed companies that will engineer these transactions. Our company, The C4D Crew, makes the point that they always protect broker commissions.

These intermediary financing specialists are a great place to turn if you need to do a seller financed deal because they will actually purchase the property from the buyer and then sell it to your client with a MN contract for deed. Using an experienced and respected company will greatly increase chances that your deal will close while, at the same time, ensuring that you do receive your commission.

The Real Estate Commission Basics 

For more information on the basics of real estate commission, check out this video from Redfin.

Millennials Overcoming Mortgage Rejection

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What is a Millennial doing in 2018 with regard to home buying? Does anybody actually know?

We’ve even been told millennials aren’t buying homes because they buy too much Avocado toast.

Getting a traditional mortgage approval can be a great relief, but some millennials may have a problem qualifying for their first home because of the following:

Millennial Down Payment

  • Bad credit
  • High student loan balances
  • Less-than-solid credit history
  • Too few open accounts
  • Too many open accounts
  • Credit report errors
  • Unpaid tickets
  • Low credit score
  • Unfavorable debt to income ratio
  • Low down payment
  • No down payment
  • Maxed-out credit cards

What to Do If You’re Denied a Mortgage

This report (and chart to the right from ABODO Apartments) shows us that millennial home buyers are all over the country, even if they’re buying at a slower rate than expected. If millennial home buyers can’t get financing, here are seven ways they can overcome mortgage rejections:

Millennial Home Buyers

1. Credit Report Errors

Always get a copy of your credit report before you apply for financing. If you’re a millennial home buyer and you haven’t done this, however, don’t worry, because if you find incorrect information on your report, you can get it removed. Doing that can substantially increase your credit score and could result in a decision reversal. Credit Karma is a great place to start.

2. No Down Payment

Of course, you know that down payments are usually required for Minnesota home loans, but you may not be aware that lenders demand to know where the money originated. If you take cash advances on your credit cards and max out your lines, lenders will not be too pleased. A down payment gift from a relative or friend is many times acceptable as long as you disclose where the money came from.

3. Student Loans

Massive student loan debt is often the norm, but if you have delinquent loans, or worse yet, defaulted loans, this can cause a quick mortgage application rejection. Make sure that all of your student loans, both private and federal, are in good shape. Go to the NSLDS to find out your federal loan balances. Mortgage lenders do have new rules to follow regarding the payment amounts they have to consider in relation to your income, so high loan balances alone may not be the problem you they are.

Student Debt Control

4. Credit Cards

High credit card balances negatively impact your credit score, so to position yourself for mortgage application acceptance, you need to pay these balances down before you apply. Lenders like to see that you are using only about 30 percent of your credit lines.

5. Try Seller Financing

If the above remedies aren’t available to you, there still are ways to purchase your first home. InvestorWords says that creative financing is “Any financing arrangement other than a traditional mortgage from a third-party lending institution.”

First, see if your seller will agree to act as the bank. The cleanest way to do this is to have the seller be the mortgagor—just like a bank—and give you the deed for the house in exchange for a small down payment and monthly mortgage payments. Of course, the seller may charge you a higher interest rate because he or she may consider you to be a higher credit risk as they agree to make what they consider a bad credit loan.

6. Rent to Own

If you have found your dream home but just can’t get it financed, see if the owner will let you rent the home while crediting all, or a portion of your rent to a down-payment. These Minnesota bad credit loan transactions can be complicated and risky, but rent to own has worked for many buyers, especially with a homes for sale by owner MN that is motivated. And according the industry leader HousingWire, tech companies like Divvy Homes are working hard to revolutionize the rent to own market.

7. Contract for Deed

Minnesota contract for deed is a proven legal method where a seller gives a buyer immediate home occupancy. The seller retains the deed, but when the buyer has made all of the agreed upon monthly payments, the buyer gains ownership. While less risky than rent-to-own, those interested in contract for deed Minnesota financing should check with their legal team before entering into any such agreement. Also, there are reputable companies like C4D  that will work with you to accomplish the contract for deed transaction.

If you were rejected for a mortgage, first try and correct the application deficiencies that caused the issue. If that doesn’t work, you may want to look to creative financing to solve your MN bad credit loan problems.

Student Debt and Housing

Buying A House with Student Loan Debt

 1000 500 Sam Radbil
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Some positive things have occurred that can make buying a house with student loan debt a little easier:

  • Fannie Mae has programs that offer three percent down-payments.
  • If your parents pay your loan, it may not be counted in your debt/income ratio.
  • The one percent rule–where one percent of your student loans were divided by 12 and counted against your income—has been rescinded.

These are great steps, but it still doesn’t solve the problem for people in debt. Student loan debt is at record levels:

Student Loan Debt

Student loan defaults are even worse:

Student Loan Defaults

So even though the government and banks are realizing that massive student loan debt could be the next bubble, there is no easy way out. Because of the 2009 meltdown, lending standards are still stringent, and many student loan debtors just cannot achieve less than the required 43 percent debt-to-income ratio. As Dan Rafter has reported, “While student-loan debt does affect the mortgage-lending process, it boils down to three factors: income, savings and credit; your mortgage professional will look at those three variables to determine what loan you qualify for, if any.”

What To Do Now?

Besides learning how to make money online fast, what else can you do? A graduating law student can easily amass over $200,000 in accumulated student loan debt. A graduating physician can have even more, and these large obligations can wreak debt-to-income ratio havoc. Many pundits actually believe that today’s student loan debtors will continue to have great difficulty qualifying for mortgages, and this will lead to lower housing prices since the demand will not exist. Look at these telling stats:

Homeowners By 30

What Are The Alternatives?

The trends are clear: students have ever-increasing debt loads and even though banks may now be a bit more lenient, traditional mortgage financing may not be possible as iffy credit is often seen as bad credit by lenders. If you have large student loan obligations and are ready to buy a home, but can’t qualify for conventional financing, a MN contract for deed may be the answer.

Contract for Deed – What’s That?

Rocket Lawyer tells us:

“Under a Contract for Deed, the buyer makes regular payments to the seller until the amount owed is paid in full or the buyer finds another means to pay off the balance. The seller retains legal title to the property until the balance is paid; the buyer gets legal title to the property once the final payment is made. If the buyer defaults on the payments, the seller can repossess the property. In some states, a seller who repossesses a property must reimburse the buyer for the fair value of improvements to the house, as well as a reasonable amount for rent.

Contracts for deeds are valid options, and even the primary option for seller financing in most states. The process typically starts as a negotiation between the buyer and seller. Generally, stock and boilerplate terms cannot apply. The average length of a Contract for Deed is five years, but it can be for any amount of time that the buyer and seller agree on. Interest rates on a Contract for Deed are not regulated, so they can be as high or as low as the buyer and seller can agree on. Similarly, the payments can be structured in any fashion that is agreeable to both parties. In some cases, the value of the house may be divided into equal payments so that the full balance is paid off by the end of the term. In others, regular payments are set up with the balance coming due in a balloon payment at the end of the term. Typically, these contracts can be renegotiated so long as both parties are willing.”

How Do I Get Contract for Deed Financing in Minnesota?

  • Find homes that are for sale by owner.
  • Locate a real estate professional to help you find contract for deed deals.
  • Find homes where sellers offer financing.
  • Work with a company that makes contract for deed deals happen for those with bad credit.

As you search online, you’ll find that contract for deed (C4D) is accepted and embraced more times in Minnesota than in almost any other state. In fact, C4D financing is many times the preferred method of Minnesota bad credit financing.

You will also discover many articles that warn about contract for deed issues, problems, and consequences. As with any form of home financing, it’s important to have your legal and financial team ready to review all financing proposals that are presented to you. You might also consider working with reputable companies like C4D that make it their business to provide solid, transparent and win-win loan alternatives—even if you are loaded with student debt.

 

Contract for Deed Scams

Contract For Deed Homes: Scams & Abuses

 1000 500 Sam Radbil
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Contract for deed is a popular alternative home financing method that is recognized by most states. Contract for Deed homes can be found in a number of different ways, but it’s important to use professional help when seeking this type of financing for your home, because scams happen and create terrible financial situations for a buyer.

What Is Recognized Where?

Contract for Deed Housing

 

When used correctly, it can mean eventual home-ownership for many persons that, for various reasons, like bad credit, cannot qualify for traditional mortgage loans. Unfortunately, some financial advisors do not recommend contract for deed in Minnesota because of various scams and schemes that employ the financing tool to defraud unwary consumers.

What Can Go Wrong

Steve had owned a business for years, but the 2009 recession hit him hard, and his business closed. Steve was personally left with significant debts, tax liens, and open judgments. He also lost his home to foreclosure, and was only able to rent a place to live with the aid of a co-signer. After a few years, Steve was able to regain his financial footing and wanted to purchase a home but his damaged credit prevented him from getting a traditional mortgage.

One day he stumbled upon a listing for a nice home in a great area that was offered for sale by owner. Steve and the owner came to a quick agreement upon price, and the seller offered Steve a contract for deed. The deal looked like this:

  • Purchase price – $200,000
  • Down payment – $10,000
  • $190,000 financed for 30 years at 6.5 percent.

Even though the interest rate was a little high, Steve liked the deal. The seller explained that while the deed would remain with him, he would transfer it to Steve after all payments were made. Steve also had the right to prepay with no penalty.

The seller offered to have his attorney do the paperwork, and since Steve considered himself legally savvy, he read every line of every document and then signed the deal. Things were great for three years, but then Steve had a visit from a banker he didn’t know.

What Happened Next

The seller had neglected to tell Steve that the property was already encumbered by a first mortgage. For the first three years, the seller used Steve’s payments to handle that mortgage, but when the seller was fired from his job, he quit making mortgage payments and used Steve’s payments to live on. After the mortgage went 90 days delinquent, the bank foreclosed, and even though the process took a while, Steve was forced to move. While in this case, the seller did not intend to defraud Steve, the end result was still a disaster, and Steve had to find a new place for his family to live.

Contract for Deed Homes Nationwide

Contract for deed is popular in all parts of the country. A recent Bloomberg article said:

“Eight years after subprime mortgages all but disappeared, U.S. buyers with bad credit can still own homes. If they come up with a nominal down payment and stay current on their monthly bills, they’ll get title to the property — after as long as 30 years. If they miss one payment, their contracts say they could lose all their money and get tossed out.”

The deals often end badly for low-income buyers.

This chart shows the extent of contract for deed usage in Atlanta, Georgia:

C4D Atlanta

Sources: 2010–14 U.S. Census American Community Survey, staff calculations based on 2013 CoreLogic tax data.

What Unscrupulous Companies Do

Two kinds of predatory contract for deed deals are prevalent today. The first one occurs when large companies buy foreclosed and unoccupied homes for pennies on the dollar. They then offer them for sale at inflated prices to persons that cannot qualify for conventional financing. Unlike Steve’s home, the sellers actually own the property free and clear of all encumbrances, but the homes are in bad condition and/or the monthly payments are structured to be extremely high. The sellers want the buyer to default so that they can quickly evict the delinquent tenant and repeat the process with new buyers.

Housing Scam

The second scam works this way:

  • Minnesota homeowner is behind on payments.
  • Has a balance of $100,000 due on a $175,000 original mortgage.
  • Buyer offers to “take care” of the mortgage issue.
  • Pays off the mortgage balance and takes possession of deed.
  • Resells home to original owner for $200,000.
  • Original owner gets a MN contract for deed home for $200,000.
  • Buyer essentially has stripped the equity from the home.

Is This Avoidable?

Interestingly, while the two examples above may be unethical, that are not illegal. Does this mean you should not consider for sale by owner homes MN with contract for deed financing? No, because there are reputable companies like C4D that strive to make the contract for deed process transparent, advantageous to both sides, and legal. Remember, it is always good to acquire legal advice before entering into a contract for deed.