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Rochester, Minnesota Home Buyer Information
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Simplify Your Home Buying Experience
Buying a home can be an enormous undertaking, so be sure to retain the services
of a qualified REALTOR®. You can trust our Rochester REALTORS® to always keep your
interests first and foremost. As qualified professionals, we'll guide you
through the entire home buying experience and assist you in being an educated
buyer.
Simplify Your Search
What features would you require in a home to satisfy your lifestyle now
and in the future? Once you know what you can afford, we'll help you explore
your possibilities; from design preferences to neighborhood choices. Search our Rochester, MN and southern Minnesota MLS Listings for a start.
 Moving
Forward
Once you have found the home that is right for you, it's time to present
an offer. This will consist of earnest money to be held in an escrow account,
a loan pre-approval letter if you will be financing the purchase, and a
written purchase agreement. This agreement will set forth your terms of
the purchase and a schedule of events in order to own the property. This
extremely important document is a legally binding agreement and should be
carefully prepared by knowledgeable REALTORS® who are qualified to cover
all of your interests.
Final Steps
Upon your complete satisfaction, arrangements will be made to attend a closing.
The closing is usually facilitated by a title or escrow company that holds
your earnest money in escrow. After furnishing the down payment and other
applicable fees have been agreed upon prior to closing, final papers will
be signed. The deed and mortgage will need to be recorded in the state Registry
of Deeds, and you will be a homeowner.
Back to Top
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| It is highly rewarding to buy, own and maintain your
own home. Whether this is your first home or you have experience with the
home buying process, we can help. When you have the tools at your fingertips,
you can be confident in your ability to search, finance your home, negotiate
terms and be prepared at closing.
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Purchasing a new home can be overwhelming. Without the
right resources and information, the buy process can be stressful and frustrating.
Start with our MLS Listings to avoid the pitfalls. We'll be there to help every
step of the way.
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Money Matters – the most important part of financing is your
knowledge of the options available. Consider the following questions as
a basis for determining your financing needs.
- How much mortgage can I afford?
- What down payment is needed?
- What is the difference between pre-qualification, pre-approval and
approval?
- What interest rates are available?
- What is mortgage insurance and is it required?
- What type of documentation will I need?
- How do 15- vs. 30-year terms compare?
- What are points and do I pay them?
- What is the difference between a fixed rate mortgage and an adjustable
rate mortgage?
- What closing costs will I incur?
- What is being "locked-in?"
- How long will the mortgage process take?
- What is included in a mortgage payment?
- What would the payments be?
- When would the payments begin?
Make Your Mortgage The Right Fit!
Mortgages to meet everyone’s needs. These summaries will help you narrow
your search.
And try our home mortgage calculators for more help.
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 Adjustable
Rate Mortgage (ARM)
A mortgage, which allows the lender to adjust the mortgage's interest rate
periodically on the basis of changes in a specified index. Interest rates
may move up or down, as market conditions change. The change in interest
rate will result in a change in the periodic payments due under the mortgage.
ARMs are attractive when short-term interest rates are trending lower.
Balloon
Mortgage
Usually a short-term fixed-rate loan that involves small payments for a
certain period of time with the balance due in a single, large payment at
a time specified in the contract. Whenever the balloon mortgage becomes
due, the entire unpaid balance is due. Generally, the homeowner must either
refinance or sell the property.
Buy-Down
The payment of extra money on a loan now so as to provide a lower interest
rate over either a given period or over the life of the loan. To buy-down
a mortgage, the buyer pays additional points to the lender, which will decrease
the interest rate for a specific period.
Conforming
Loan
Conventional home mortgages, first mortgages up to loan amounts mandated
by Congressional directive, which meet the qualifications for sale or delivery
to either the Federal National Mortgage Association (FNMA) or the Federal
Home Loan Mortgage Corporation (FHLMC).
Construction
Loan
A structured, short-term loan to provide funds necessary to begin construction
on buildings or homes.
Conventional
Mortgage
A mortgage loan made by an institutional lender without the inclusion of
government guarantees such as VA or FHA loans.
Convertible
ARM
The convertible ARM is a combination of both fixed-rate and adjustable rate
mortgages, allowing the best of both options in one package.
Deferred
Interest Mortgage
A mortgage in which the payment is not sufficient to cover the principal
and the interest and the payment portion of the interest is postponed until
a certain date at which time the interest postponed is added to the principle
owing.
Federal
Home Loan Mortgage Corporation (FHLMC)
The Federal National Mortgage Association is a congressionally chartered,
shareholder-owned company and is the largest national supplier of home mortgage
funds. It is commonly known as Freddie Mac. The company buys mortgages from
lending institutions, pools them with other loans, and sells shares to investors.
Detailed information may be found at http://www.freddiemac.com.
Federal
Housing Administration (FHA)
An agency of the federal government, the Division of the Department of Housing
and Urban Development, that sets standards for the underwriting of private
mortgages and insures residential mortgages made by private lenders.
Federal
Housing Administration (FHA) Loans
Federal Housing Administration (FHA) low-rate loans are available to Americans
with smaller incomes who are interested in modestly priced homes. Down payment
requirements are usually lower than the prevailing ones.
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Federal
National Mortgage Association (FNMA)
The U.S.'s largest supplier of mortgages to home buyers and owners, a corporation
established by Congress and owned by stockholders. It is commonly referred
to as 'Fannie Mae,' this government-sponsored enterprise is chartered by
Congress. This federally chartered agency buys mortgages from lending institutions,
pools them with other loans, and sells shares to investors. Detailed information
may be found at http://www.fanniemae.com
Fixed-Rate
Mortgage
The interest rate you pay and the monthly principal and interest payments
are agreed upon from the outset and will not change throughout the entire
term of the mortgage.
Government
National Mortgage Association (GNMA)
A government-owned corporation within the U.S. Department of Housing and
Urban Development, it is also referred to as 'Ginnie Mae,’. This government
agency guarantees the payment of principal and interest on all of its pass-through
securities, and its guarantee is backed in turn by the full faith and credit
of the U.S. Government.
Graduated
Payment Mortgage (GPM)
A mortgage that usually starts the borrower with low payments that are gradually
increased over five to ten years, before leveling off for the remainder
of the term of the loan until the loan is fully amortized. Negative amortization
usually occurs until the payment reaches the level payment stage. Usually
government insured loans (VA or FHA)
Growing
Equity Mortgage (GEM)
This is a long-term mortgage whereby the borrower agrees to increase his
payment each year by an agreed amount. The added money per payment is applied
directly to the outstanding principal on the mortgage. The mortgage thereby
is paid off in a shorter number of years.
Renegotiable
Rate Mortgage (RRM)
Similar to an Adjustable Rate Mortgage, this type of mortgage allows the
interest rates and payments to be adjusted periodically according to an
index.
Reverse
Annuity Mortgage (RAM)
A type of mortgage where the property's equity serves as security for periodic
payments made by the lender to the borrower. Mortgage is generally paid
out upon the sale of the property.
Rollover
Mortgage (ROM)
A mortgage where the payments are only guaranteed for three, four, or five
years. The borrower is allowed to refinance at the end of the term at the
interest rate then applicable.
Shared
Appreciation Mortgage (SAM)
It is a loan arrangement where two or more parties participate in the purchase
of real estate and share the appreciation and tax deduction. Similar to
shared equity mortgages.
Veterans'
Administration Loans
Mortgage loans to veterans by banks, savings and loans, or other lenders
that are guaranteed by the Veterans' Administration, enabling veterans to
buy a residence with little or no money down.
Wraparound
Mortgage
A secondary financing option in which a new larger mortgage is created to
encompass the first mortgage. This large second mortgage is used to preserve
the low interest rate on the first mortgage for a potential buyer.
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Drive To Learn
Evaluate as you drive though a Rochester Minnesota Community. Consider the following questions
as a basis for determining your location needs:
- Where is the nearest shopping center, bus line, police station and
library?
- What schools are available and school district are you in?
- What types of homes (single family, apartments, condominiums) are
in the neighborhood?
- How far apart are the homes?
- How far is it to your work?
- What community resources are available?
- Generally, where are the cars parked (driveways, garages, street)?
- Do you notice a lot of noise, traffic or pollution?
- Are the homes in good repair and the landscaping well kept?
 Finding
The Right Home
Keep your eyes open and your notebook in hand as you walk through a potential
home. Consider the following questions as a basis for determining your needs
as a homeowner:
- How long has the home been on the market?
- Why is the home being sold?
- What is the asking price of the home?
- Has the price been lowered?
- Is the price comparable to other homes in the neighborhood?
- What is the down payment required?
- Is the house structurally sound?
- Is there room enough for the present and the future?
- Do you like the floor plan of the home?
- What condition is the yard in?
- What improvements must be made?
- Will the seller repair or replace any items that need repair or replacement?
Think carefully about each house you see and don’t be in a hurry.
Your Rochester REALTOR® can point out the pros and cons of each home from a professional
standpoint.
The Offer
Making an offer to buy a home entails many factors. You and your Rochester REALTOR®
will discuss the following factors prior to putting the offer on the table:
- Amount of earnest money
- Down payment
- Price you are offering
- Details of financing
- Proposed move in date
- Proposed closing date
- Details of the sale
- How long the offer is valid
The seller will either accept the offer as presented, or make a counter
offer and either you will agree to the terms in counter offer or you will
submit another proposal. When all the parties involved have agreed upon
the details, initialed any revisions, and signed the final agreement, then
an offer becomes a contract.
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Sales contracts may differ significantly yet all should
clearly set forth the responsibilities and privileges of all the parties
involved. It is a legally binding document that protects each party. Carefully
review the terms of the contract. The sales contract should include the
following:
 Legal
description of the property and the exact street address
- Selling price of the property
- Amount of earnest money and who is holding it – Often it is held
in an escrow account by a third neutral party.
- Amount due at settlement
- Specifics of the mortgage (amount, rate and terms)
- Title or Escrow company - Either a title company, escrow company,
or attorney must be areed upon by buyer and seller
- Details W of the closing - when and where
- Home inspection - Recommended to ensure against structural and unknown
defects, and must be completed by a specific date set forth in the contrct
and completed by a cerified home inspector
- Inclusions and exclusions - Examples would include washers, dryers,
drapes, etc.
- Pest Inspection - Who is responsible if there is damage or an infestation
- Warranties - Get the description of any that are included with the
house
- Repairs – Unless you are accepting as-is, state who is responsible
for repairs, with a date for a walk-through inspection
- Well and septic – They must pass a test, if applicable
- Date of possession – When you take possession of the property
- Acceptance date – Either an acceptance or counter offer must
occur by a specified date
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Once the contract is signed, your REALTOR® will continue
to be your advocate and ensure that your best interests are served. Some
of the details they will be available to handle are:
- Assist with scheduling all necessary pre-closing inspections
- Check finances are deposited according the contract specifications
- Keep you informed of any unseen problems that may arise and offer
solutions
- Present a list of utility companies available for service
- Schedule and attend-the pre-closing walk through
- Prepare for and attend the closing
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