Buying a home in Minnesota? While the process is similar to many other states, there are specific nuances you should be aware of. Let’s walk through the process step by step:
Minnesota Homebuying: The Basics
Closing Agent’s Role
In Minnesota, transactions often involve a closing agent. This individual can either be a real estate attorney or a title company representative, and they help finalize the deal and draft all the necessary closing documents.
Shared Closing Table
Both buyers and sellers in Minnesota commonly finalize the deal at the same closing table.
Sale During Contingencies
Sometimes, sellers in Minnesota might keep the property listed even while waiting for contingencies like inspections to be fulfilled. Ensure you understand the terms in your contract and its addenda.
Part 1: Disclosures, Inspections, and Title
- Once the seller accepts an offer, both parties sign the contract.
- At the same time, the buyer deposits earnest money with a trusted third party – this could be an attorney, broker, or escrow agent.
- The contract is forwarded to an attorney or title company to initiate the title search and manage title transfers.
- Buyers are advised to request an early title search. It can identify potential liens or assessments that could hinder the transaction.
- Buyers need to review and approve any disclosures. These can relate to property conditions, repairs, or potential environmental issues.
- Mandatory disclosure in Minnesota is the seller’s property disclosure statement. Both buyer and seller must sign this; otherwise, the transaction halts.
- If stipulated in the contract, the buyer can commission property inspections. Any discoveries must be reported within a set number of business days.
- In Minnesota, common inspections include checks for home structure, lead paint, mold, pests, and radon.
- Post-inspection, buyers can either request seller remedies or cancel the agreement, reclaiming their earnest money.
- If the seller can’t fix a significant issue, the buyer can opt-out without penalties.
- Contracts may allow the seller to keep the property listed until the removal of contingencies.
Part 2: The Mortgage Process
- If you’re borrowing, apply for a loan directly or through a mortgage broker. Expect a “Good Faith Estimate” from the lender within three days, detailing estimated closing costs.
- Before making an offer, get a lender’s pre-approval. You’ll need to provide various financial disclosures.
- The lender then decides on the loan approval and, if granted, issues a loan commitment letter detailing conditions for funding.
- The lender orders appraisals. If the appraisal values the property lower than the purchasing price, it could jeopardize the loan.
- Ensure you remove the financing contingency within the stipulated time. If you don’t secure financing by the closing date, understand the repercussions on your earnest money.
- It’s crucial to have homeowners’ insurance. Provide proof to the lender.
Tip: Avoid making significant financial decisions or changes throughout the mortgage process.
Part 3: Finalizing the Purchase
- Final costs are calculated, and buyers are informed of the amount they need to bring to the closing table.
- Depending on the contract, a final walkthrough ensures the property remains in the agreed-upon condition.
- At the closing, all involved parties sign the necessary documents.
- The buyer finalizes their downpayment.
- The transaction and deed are recorded officially.
- Keys are handed over to the buyer, marking the official change in property ownership.