Kate's Blog


A construction renovation loan may be just what you need…

August 11th, 2017

Constructionext reno loans, or any of the construction renovation products we offer, allow you to buy and renovate at the same time, saving you lots of money. Looking at a property that needs some work? Our suite of products gives you the ability to roll the work into the mortgage. You do not need to have cash to make the updates on top of your down payment.

The number one reason to use a renovation product when you purchase is the use of conventional or FHA rules for down payment. Conforming conventional loans require as little as 5% down, and FHA requires 3.5%. The product that will be recommended to you will be based upon the current purchase price of the home, the repairs you wish to undertake, and the end value that will reflect the completed project.

• FHA loans have a maximum mortgage limit in our metro area of $332,350.
1. FHA 203K Limited Renovation products allow for non-structural repairs up to                        $35,000.
2. The FHA 203K Full Renovation product would be used if you have structural
repairs, or if the scope of work will be over $35,000.
• The Conventional Renovation product also offers different programs related to the
structural or non-structural aspects of the work to be done, and comes with a higher
maximum loan amount of $424,100.
• A Conventional Construction loan may be what you need. If your project is the
purchase of a property with an existing structure that needs to be torn down and a new
home built, we have a full construction to permanent product just for you.

When you are out looking at properties that meet your size, location, and school district requirements, try to see beyond what the house looks like in its current state. Envision what it could be if you made the changes that will make it the right home for you. Have your contractor put together a plan and a bid to do the work. Then, you can buy with confidence – renovate and save. – Randy Cullen, NMLS #326128

August 4th, 2017

Young Couple Dreaming And Imaging Their New House In Real State Concept

Have you ever woken up in the middle of the night wondering if the process for applying for a construction loan is any different than applying for a regular conventional loan? Well, you’re in luck! I did wake up in with this thought in my head, and considering the large volume of new construction loans we do, I thought I would speak to the topic.

Generally, if you can qualify for a conventional loan you can qualify for a construction loan, with a few extra steps. The construction loan is just an added part of our qualifying process. For a standard conventional loan the agency automated underwriting system will read income for ratios, assets to cover the cost of the transaction, and credit score/history to determine if the file meets agency guidelines. In many cases a lower credit score and the absence of reserves will still produce an approval result for a conventional loan. For the construction loan we would require a strong credit profile and reserves. By starting with end loan structure/approval, we can determine if a construction loan will work for you.

The construction loan process looks at more elements of risk than just the initial borrower approval. We look at the big picture, which includes the scope of the project that will be undertaken, the location of the project, and the builder/contactor that will be doing the work. We need to make sure you qualify for what you want to do, that the market will support a value for the project, and the person or company you have selected for the project is qualified and licensed.

We are here to help you through the steps so you don’t have any sleepless nights wondering if construction financing can work for you! Help is only a phone call away at 952-851-8962.

– Randy Cullen, NMLS #326128

Is qualifying for a mortgage difficult if you’re self-employed?

July 28th, 2017

emplpoyee or self-employed booksHow do you qualify a person for a mortgage when they’re self-employed? Are there simple rules for self-employed borrowers to follow that make the process less difficult? And the answer is—the rules are the same, yet different! Self-employed borrowers may have more paperwork, but the overall goal is the same – determine the income that can be used to qualify.

Self-employed borrowers are individuals that have a 25% or greater ownership interest in a business, or borrowers that earn income reported on a 1099 form rather than a W2. The income is reported on the individual’s federal tax return under schedule C, or may flow from other corporate filings to schedule E.   Self-employed borrowers need to manage their own withholdings for payroll taxes and also manage their own daily expenses. The tax return documentation that will be requested from them will start with the personal return, but may be a combination of personal and business/corporate. When the returns are well detailed and all schedules are provided, arriving at usable income is not a hard task. Read the rest of this entry »

Documentation during the loan process can be arduous…but it is necessary

July 21st, 2017

white flagThe question of the day is, “Why do we ask for so much paperwork during the mortgage pre-approval process, what happens to all of it and why do we need more before closing? If I am underwriting pre-approved, why is that not enough?” Yes, it is true, we ask for lots and lots of things. The depth of paperwork is directly tied to how you earn your income, where all the assets for closing are held, and what your overall credit profile looks like. Self-employed folks require more documentation than someone who works an hourly position or is a salaried employee. Even though the mortgage pre-approval process can all be done online, paperless these days, it is still time consuming.

Our mortgage process provides an underwriting pre-approval right up front. To that approval, we add the appraisal and title work to complete the file. Doing all of this upfront puts another set of eyes on the file so that any additional documentation the underwriter needs can be acquired and added. Now, even though you think we are all done, we really are not. Again, based upon the length of time a file is in process, updates will be needed to extend the approval date to match your closing date. These updates are necessary for underwriting…not just because we want to pick on you! We must prove that you are still working, still have your assets, and have not allowed your credit to fall off the cliff. Read the rest of this entry »

It is time to declare your independence from your landlord!

July 14th, 2017

money housing house home loan wealth investment mortgage - stock imageThe month of July is Independence month.  As a nation, we have celebrated the 4th of July.  In the Midwest, we celebrate our independence from winter.  For anyone out there still renting rather than owning a home,

Over the years we have all seen prices go up on nearly everything we purchase or consume.  If you are an investor in the stock market, you want to take advantage of buying low and watch your investment grow over time.  If you are an investor in real estate you try to buy and or sell at the right time in order to maximize profits.  If you are a real estate investor who buys and holds for rental, you look at maximizing your investment through the collection of rents.  There has been research done that provides information on the current rental market in the area and what a home could rent for (it is amazing to me how much rent can cost).  For example, a 4-bedroom home in a suburb can fetch $600 to $650 per bedroom in the market.  This means a $300,000 4-bedroom home purchased or built for investment could return as much as $2600 per month in rental income.  This is great as an investment strategy for the landlord, but anyone that can afford this rental payment should not use renting as a long-term strategy.  It’s time for you to buy.

There are a variety of programs to help buyers get into the market without a lot of money out of pocket.  In our 11-county metro area first time or move up buyers have access to Minnesota Housing Finance Agency programs with down payment assistance.  That $300,000 home could be purchased as a primary residence using an FHA MHFA loan with down payment assistance, some seller paid closing costs and only a $1,000 minimum investment required.  This example would save an estimated $478 a month over the estimated rental payment of $2,600 per month for this 4-bedroom home example.  Imagine what your budget would look like with an additional $478 every month. That alone should be proof that the longer you wait the more it will cost you.

Buying a home should be part of your overall financial strategy.  Owning a home helps you build equity in an asset that you actually own.  It provides a safe and secure environment for you and your family.  Homeownership contributes to building stronger communities.   And, homeownership has always been part of our American Dream.  Time to get out there and join the dreamers!

Randy Cullen NMLS #32612

Buyers need to be prepared for the hot market here in the Twin Cities! – by Randy Cullen

July 7th, 2017

thermometerBaby, it is HOT outside! The warm temperatures have finally returned to make it feel like summer time. The heat is on, and the Twin Cities housing market is feeling it too. Inventories of existing homes have dropped to nearly a two month supply (6 months is a normal market gauge), and prices are being driven up due to the low number of listings. High demand with low supply drives the price. Existing homes sell quickly if they are staged well and priced correctly. Sellers are enjoying multiple offers and increased prices with the bidding wars that inflate the value. Buyers need to be pre-approved and prepared to be nimble, as competition is fierce.

When prices are on the rise everyone needs to be considerate of the appraised value. Appraisers are tasked with finding comparable sales in the surrounding area to support the price the willing buyer and seller have agreed to. Not an easy task when prices are climbing faster than the accumulation of closed sales to support the increase in value. It is a reality of our market that sale prices are outpacing values, and that creates heartburn for all parties. Canceling the contract and putting the house back on the market will not necessarily solve the problem. Renegotiating contracts is not on anyone’s list of favorite things, but it can become necessary if the buyer does not have the cash to cover the shortage between appraised value and contract price. Getting the price more in line with the value quickly solves the problem. Removing seller paid closing costs that the market cannot support may also help. Read the rest of this entry »

It’s finally summer time, and the lakes are calling for you…answer the call. – by Randy Cullen

June 30th, 2017


Can I buy a second home, on a lake, and renovate it? The answer is, yes you can! Our construction financing product allows you to buy and renovate so the lake home of your dreams can be a reality.

Any residential mortgage we place on a home will require that the property can be occupied for all four seasons. This means it must be common for the area, be accessible, and will be fully functional as a year round home. That seasonal cabin that you’ve had your eye on could be purchased and renovated to take it from a three season to a four season home.

Seasonal properties, if they are structurally sound, can be made into functional all season homes for those weekend retreats and vacation getaways. The normal seasonal property is not equipped to be lived in during the winter months. It may lack insulation, an adequate central heating source, or fully functioning plumbing. All of these can be remedied with a construction renovation loan.

When you are writing a purchase agreement to buy the property, remember to leave time in the purchase contract to get a licensed contractor out to the cabin. You will need to address the list of items required to take the seasonal aspect away, and add all your wish list items to the project as well. This is the perfect time to put our low mortgage interest rates to work for you. Read the rest of this entry »

Credit scores are important when it comes to construction loans.

June 23rd, 2017

Credit Score

Can I get a construction loan if I have credit challenges? This is a valid question, and one I get several times during the month. Credit scores are extremely important when it comes to construction or construction renovation loan programs. Each of the products or programs we offer can differ in the credit scores that are acceptable.

To begin with, we only use company approved credit reporting vendors. These vendors are also approved with the agencies’ automated underwriting products that we use. The vendors go direct to the credit repositories that keep the data and merge it into a report with scores. The three repositories are Equifax, Transunion, and Experian. These reports merge directly into our system and the automated underwriting systems we use. The report will contain credit scores, a list of any inquiries for new credit within the most recent time period, a list of any public records that might exist, and the history of individual credit accounts used to create the score. The scores take into account the number of accounts shown, length of credit history for each account, report of timely payments made, and the ratio of balance of revolving accounts to the credit limit granted for each. These are very detailed reports.

When three credit scores are present (in most cases) our automated underwriting system uses the middle of the three scores for its credit decision. Here are some of the basic rules as they relate to construction and renovation products: Read the rest of this entry »

Storm season is upon us – know what to do if your home sustains damage!

June 16th, 2017

hail damageLast Sunday morning severe weather hit the twin cities.  Many of the northern suburbs suffered severe wind and hail damage.  Both of my daughters and their families that live in Blaine were affected with broken windows, roof, gutter and siding damage. Anyone that is dealing with this knows it is not easy to recover from.

Your first step after storm damage is to contact your insurance company to determine your coverage and filing requirements. Take photos or video of any damage. If you are doing any cleanup prior to the adjuster showing up, it is a great idea to document everything.

If you need to make minor repairs to limit any further damage (as in water damage) do so, but otherwise do not make any permanent repairs until you have approval from your insurance company.

Get multiple estimates and beware of high-pressure sales tactics. Ask friends or family for recommendations. It is always good to get a referral from someone you know and trust.

Ask contractors/vendors for proof of liability and workers compensation insurance. Make sure they are licensed to do work in your state. There will be contractors from outside the area that will come into the area looking for work – Please be careful!

You need to have a written contract from anyone you hire. Be sure to read all paperwork very carefully before you sign. The contract should detail the work to be done, the materials that will be used, and a price breakdown for labor and materials. Don’t pay cash for a job, and don’t pay up front.

Also, don’t file a claim for something you don’t intend to fix. This is a big one for us in the mortgage business. If you hold a mortgage, your mortgage company has a vested interest in having the property restored. Many times your mortgage company will need to sign off on the check coming from your insurance company.  Read the rest of this entry »

Let us help guide your construction ideas to a successful outcome!

June 9th, 2017


Will I be able to use construction financing to build a barnlike structure with living quarters?” This is a question that came up this past week. New construction financing and construction renovation financing do have their limits. This week I would like to discuss what works, and what does not work, for residential new construction and construction renovation financing.

Our program works for conforming residential properties. These are generally owner occupied, but we do have clients who build or renovate a property that will be retained and rented. We look at the highest and best use for the property, which needs to be residential in nature even if it is outside of a metro area in a more rural setting. When the appraisal is done on the new build or renovation project, the appraiser will look for comparable properties around the area. The property needs to be compatible, or common, for the surrounding area or market in which it is located.  So, if someone is looking to buy acreage and wants to build a new home, that is great! If that new home will be a barnlike structure with horses on the main level and living quarters on the second floor, that will be outside the scope of our conforming loan products.  Read the rest of this entry »