Minneapolis Homebuying

Why Buy Instead of Rent?

Join "the American dream", and take your most important financial step, homeownership. Buying a home represents a wise investment because unlike most other investments, real estate has intrinsic value. Because of the intrinsic value of a home, houses increase in value over time. Over time, as your house appreciates in value, you can build ownership interest, called equity. Equity represents your actual ownership in your home, and as such you can borrow against it. In addition to building equity in your home, there are tax advantages to owning a home, because your interest payments are tax deductible.

Where To Start

  • What is a mortgage?

    • A mortgage is a loan backed by real estate. Which means, a lender gets your promise to pay back the loan to purchase a piece of property over a certain period at a certain cost. In addition to your signature and promise to pay, the property secures the loan. If you stop repaying the loan, called default, the lender can take over ownership of that property.

  • Mortgage Payment Breakdown

    • Typically, a mortgage payment consists of four parts:

    • Principal

      The portion of monthly payment that is applied against the original amount borrowed. Over the life of a standard mortgage loan, the entire original amount borrowed is fully paid off, or amortized.

    • Interest

      The interest rate is the fee you pay, as a percentage of the outstanding balance for the past month.

    • Taxes & Insurance

      Generally taxes, homeowner's insurance and mortgage insurance are placed in a separate escrow account.

  • How do I qualify for a mortgage?

    • Most lenders use the same benchmarks to approve applicants for a mortgage. Typically lenders use a formula comprised of the "the four C’s"

  • How much home can I afford?
  • How large of a loan can I be approved for?
  • How important is my credit history?
  • How much do I need for a down payment?
  • What about closing costs?
  • What kinds of mortgages are available?
  • What are my possible financing choices?
  • Which loan is right for me?
  • Are there any tips to consider when loan shopping?
  • How important is preapproval?
  • Who will approve my application?
  • What happens after I apply?