Minnesota Housing Finance Agency, MN Down Payment Assistance

Minnesota_Housing_Finance_AgencyHow do you finance the purchase of a home? According to the Minnesota Housing Finance Agency, if you don’t have a lot of cash on hand, you can apply for a mortgage. This is a “secured loan” using your home as collateral. In other words, you’re paying off the loan over time to the entity who loaned it to you. If you can’t pay it off, that entity will own your house– and that’s what’s meant by “foreclosure.” You don’t want that.

Mortgages, meanwhile, are typically paid off over the course of several years. It’s like paying rent money for an apartment, except it’s toward truly owning your own home. Mortgages are often spread out over 15 or 30 years, giving people ample time to pay back their loan(s).

There are two parts of a mortgage. First is the principal, which is the amount you need to borrow to pay for your home and closing costs. Second is the interest. It’s what you pay the financial institution for the use of its money.

By the way, there’s such a thing as a fixed-rate mortgage whereas you have the same interest rate for the life of the loan. The alternative is the adjustable-rate loan, where the interest rate can change from year to year. You’d be wise to consult with someone from the Minnesota Housing Finance Agency or a person from Lake Area Mortgage in order to determine which type is best for you and your situation.

When trying to figure if you can afford the house you’d like to buy, you should be “pre-approved” by your lender, so your ducks are all in a row when you go to bid on the house. Being “pre-approved” shows others that you have the financial means to afford a house. Mortgage lenders will work with the numbers concerning your current gross monthly income income and total debt in order to figure out your overall financial health. You ideally want to be pre-approved and then approved for a mortgage, so you can use the mortgage toward buying the house you want.

The Minnesota Housing Finance Agency assists many people in the process of buying a home in Minnesota. Their website is www.mnhousing.gov.