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buying a house

Buying a House After Foreclosure

Buying After Foreclosure: Your Next Steps

 1000 500 Sam Radbil
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While many people think that foreclosure, like bankruptcy, signals financial death, this is simply not true. The chart below shows that distressed Minnesota home sales have significantly fallen, but if you lost your home to foreclosure, contrary to what you might have read, you may find yourself in the market for buying a house after foreclosure.

Distressed Home Sales

What Is Foreclosure?

Our friends at Investopedia define foreclosure like this:

Foreclosure is the legal process through which a lender seizes a property, evicts the homeowner and sells the home after a homeowner is unable to make full principal and interest payments on his or her mortgage, as stipulated in the mortgage contract.

Here’s why it might have happened to you.

Buying A House After Foreclosure: The Reasons

You may have faced foreclosure for one or a combination of the following reasons:

  • Major illness
  • Job loss
  • Spousal death
  • Predatory mortgage practices
  • Adjustable rate loans
  • Unexpected relocation
  • Divorce
  • Excessive credit card debt
  • Lots of student loan debt
  • MN Bad credit

Regardless of the cause, you can take steps now to first rebuild your credit, and subsequently find yourself buying a house after foreclosure.

Credit Repair

Credit Repair for Foreclosure

The first thing to do is repair your credit. If you have overwhelming debt and are continually making payments late, it will be difficult to make progress. It is important to become cash flow positive in order to begin chipping away at your debt, and a legitimate credit counselor or a good financial advisor can help you here. If you don’t feel that you will ever be able to get out from under your particular debt situation, bankruptcy may be an option since this would give you the proverbial clean slate to begin again.

Everything Has Its Price

If you have gone through foreclosure, you already know that foreclosure will quickly drop your credit score – maybe 100 points or more. Bankruptcy can do the same thing, so there will be a time period when no one wants to lend you any money. You can rebuild your credit but it means being diligent and taking small steps. This FICO chart explains what categories constitute your credit score:

Buying A House After Foreclosure

Get A Card

The first way to repair your MN bad credit is to get a credit card. This may have to be a secured card; in this situation you deposit money with the credit card company and basically borrow against it. You do this because if you make on-time payments, these will be reported to the credit bureaus, and your credit score will rise. Make sure you are never late on any payments, and that you do not make the same mistakes that got you into trouble the first time.

Time Is Your Friend

If three years have passed since your foreclosure and you have had stellar credit since that time, it will be possible for you to get a mortgage.  You probably will have to come up with a 10 percent down payment, and lenders will be a lot happier if they see that you have saved that amount. Still, you will face a load of scrutiny, and you will pay a higher loan interest rate. You may be turned down by a number of lenders, and that can be a frustrating process. Keep in mind, you can find ways to make quick cash. For example, you could use the ibotta referral code to save a few bucks and get your finances in order.

Contract for Deed Financing

This is where your friends at C4D can help. We are a legitimate Minnesota business that helps people with bad credit issues, and we help them become homeowners. Our process looks like this:

  • You find your dream home.
  • You fill out our online application.
  • We contact you.
  • We determine if we can help.
  • If so, we buy the home.
  • Then we sell it to you utilizing a MN contract for deed.

Please feel free to contact us if you have any questions. Bankruptcy and/or foreclosure are traumatic financial events, but you can certainly recover from them, and we are here to help!

Buying A House In Minnesota

Buying A House In Minnesota: The True Cost

 1000 500 Sam Radbil
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You already know that home buying a house in Minnesota is complicated, but if you haven’t been through the process there are many details you need to be aware of. Even if recently you bought a car and felt like you were on your game at the dealership, buying a house is definitely like playing in another league.

Here’s what you really need to know:

Everyone Likes to Get Paid

Home deals regularly generate multi-hundred thousand-dollar deals, and lots of people want a piece of that. Lawyers, Realtors, title companies, surveyors, paralegals and even more groups are all in the hunt for your money, so let’s look at some of the costs.

Realtor Commission

Buying A Minnesota House Realtor Commission

Standard real estate commissions are six percent of the total deal with the amount split between Realtors or real estate agents involved. Even though this amount is almost always paid for by the seller, you can bet that it has been rolled into your purchase price.

Title Policy

When you buy a property, you must be sure that you are not purchasing someone else’s problems. Title companies insure that you will have a clean title; if something comes up later—like a lien the title company did not uncover—the title company will have to make things right at their expense. This can cost you $1500 to $2000, however.

Document Preparation

Lending institutions love to charge for you document prep, even if they are only cutting and pasting into a form document. This can set you back $500 or more.

Attorney Review

The same goes for the cost of having the bank’s lawyer review the deal. This can cost $150 – $500. And if you need more information about real estate law, check out this real estate law resource.

Buying A Minnesota House Using Attorney

Underwriting Fees and Application Fees

Lenders also may charge you random amounts for merely applying for your loan. The due diligence they normally perform is often charged as an underwriting fee.

Fee For Buying A House in Minnesota

So, you go to the bank, they approve your loan and they give you an interest rate. You’re done, right? Not so fast, because the bank many times will charge a fee to lock in your interest rate for a fixed time period. Don’t forget to include this fee in your budget!

Origination Fee

This is free money for the bank. They may charge one percent of your total loan just to give you the privilege of borrowing money! If you need a more clear definition of the origination fee, you can take a look at this resource from Investopedia.

Discount Fee

Mortgage Interest Rate

If you want a lower interest rate when you’re buying your house in Minnesota, you can pay upfront. This is sort of like the $199 per month car payment that requires $3,000 at signing. And when it comes to your interest rate, take a look at a few of the major factors that determine the actual rate.

Credit Report Fee

The bank can access your credit report for free—so can you at Credit Karma—but they might charge you 35 bucks anyway. Remember, pay your bills on time, take out smart loans for other purchases and make sure you keep track of changes to your credit score. It’s a very important piece of the home buying process.

Homebuying Credit Score

Appraisal

You know that you are buying a house in Minnesota at market rates, but your bank wants to be sure, so they will send a $500 appraiser out to confirm that the sales price meets the neighborhood comps—of course at your expense. For more information about what an actual appraisal means, check out this real estate appraisal resource from Wikipedia.

Home Buying Appraisal

But Wait

That’s not all as the bank may even charge you a wire fee to send your loan proceeds to the seller. Creative financial institutions are constantly looking for more ways to add costs to your home buying transaction, and you may be even charged a signing fee for executing your loan documents!

Having Trouble?

Remember, traditional financing for buying a house in Minnesota isn’t always the only way to go. We at C4D make home ownership possible through MN contract for deed. If you are having trouble with the bank, have large student loan debt, have MN bad credit, have liens, judgments, or just need an alternative financing solution, be sure to contact us; we’ll do everything we can to make your home ownership dream come true.