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Looking to Buy a New Construction Home In Or Near The Twin Cities: The ABCs of New Construction Loans

Twin Cities Luxury New Home

Building a new home may be something you are considering, especially when the current pre-existing home inventory in the Twin Cities and surrounding areas are currently on the low-end. If so, you should contact a mortgage lender to discuss the options for a new construction loan, Please find below some general information pertaining to new construction home loan.

Mortgage Application

What is a construction loan?

New Construction loans are short-term, which can be a higher-interest-rate mortgages that cover the cost of building or renovating a home. When the buyer qualifies for the final mortgage and the lender pays the contractor for cost on a pre-approved schedule. Once the construction is complete, the loan is converted into a traditional home loan.

Type of Construction Loans

• Construction to Permanent – Converts to a permanent loan with the interest rate locked in at closing.
• Construction Only – Must be paid off when construction is complete, so the borrower will then need to get new financing.
• Renovation Construction Loan – Cost of renovations are included in the original mortgage based on the value of the home after the repairs or upgrades. Best used for buying a fixer-upper property.

What’s included in the loan?

The construction loan generally pays for:
• Land
• Labor and materials
• Plans, permits, and fees
• Contingency reserves to allow for changes and delays

Can I qualify?

All mortgages have minimum qualifications for approval. Construction loans are riskier for the lender because there is no existing collateral in the form of the home. Along with typical requirements for debt-to-income limits and FICO score minimums, the mortgage lender will often ask for a higher down payment (20%-30% is typical) and a plan to pay off the loan at the end of the project (proof of cash or loan).

If you’re considering buying a new construction home in the Twin Cities or the surrounding areas, please feel free to contact RE/MAX Results – Shannon Lindstrom, Realtor @ 612-616-9714 or visit www.ShannonLindstromRealtor.com.

The information above is general information, it’s important to speak with a mortgage lender pertaining to details pertaining to new construction loans, etc..

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Condo Shopping in the Twin Cities? Get Mortgage Pre-Approval First

A cup of coffee & IPAD

Across the Twin Cities, condos & lofts are selling at record prices – the median has never been higher, in fact. That’s great news for condo sellers, but not great news for aspiring condo & loft buyers, since the current active inventory is on the low-end. The high prices are the result of an incredibly tight market. If you’re interested in buying a condo or loft in Minneapolis/St Paul, mortgage pre-approval has never been more critical; learn why. 

What is Mortgage Pre-Approval? 

Mortgage pre-approval is an evaluation process that indicates how much mortgage financing you will quality for, based on your income, assets, credit score, and debts. Mortgage lenders issue the pre-approval; to get mortgage pre-approval, meet with a mortgage lender (either face-to-face or online) and provide information about your income, assets, and debts. The lender will also ask for specific documentation, usually your taxes and employment records, and run a credit check on you. Then, they will take all this information, figure out how much mortgage financing you qualify for, etc… Most mortgage lenders assign a time frame for the pre-approval, for instance three months. 

Mortgage Application

Why Mortgage Pre-Approval is Critical for Condo Shopping in Minneapolis/St Paul 

A pre-approval letter is like a line of credit, it tells the seller that you’re ready to do business now, instilling confidence. It also places you a step above all other condo shoppers who haven’t been pre-approved. 

Pre-approval benefits you too, because it helps you budget and shop for property realistically. 

When the real estate market is tight, you need every competitive advantage.

If you are looking for a Twin Cities Real Estate Agent, please feel free to contact RE/MAX Results – Shannon Lindstrom, Realtor @ 612-616-9714 today.

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Key Differences of VA Mortgage Loans vs Conventional Loans

Our service personnel and veterans give so much to our country. While they sacrifice much, there are a few special benefits that only these service men and women can take advantage of; one of the best benefits is the VA Loan.

Minnesota Veterans

The VA Loan differs from a Conventional Loan in a number of ways. While both provide great interest rates for borrowers and are both backed by US Government guarantee programs, this is where the similarities end.

Key Differences/Advantages of the VA Loan

• 0% Down Options – VA Loans offer the option of a 0% down payment vs conventional loans which need 10-20% minimum down payment.
• No Private Mortgage Insurance Required
• More Lenient Credit Qualifications – FICO scores are used for both conventional and VA Loans, but VA Loans consider a lower threshold for loans while still offering favorable interest rates.
• Can Be Used More Than Once – VA Loan borrowers can regain their eligibility for a VA Loan without giving up their first loan. In other words, if a service member wishes/needs to rent out their current home to move, they can regain their eligibility and use the VA Loan Programs again.

VA Loans is a great benefit for our service men and women who give so much to their country.

If you’re looking to buy a home in Minneapolis, St. Paul or the surround suburbs, please feel free to call, text or email RE/MAX Results – Shannon Lindstrom, Realtor at 612-616-9714 or visit www.ShannonLindstromRealtor.com today! I can help you achieve your goal of homeownership.