Buying a Home

If you’re considering buying a new home in Rochester MN I’ve included a general overview of the entire process below. If you would like more information or to discuss the specifics of the home buying process, qualifying for a mortgage or any other questions you have about buying, I or one of my buyer specialists would be happy to talk you. You can reach me at 507-252-6745 or click here.

Coldwell Banker Home Buyer’s Guide Book

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Buying a Home | Rochester MN

Simplify Your Home Buying Experience

Buying a house can seem to be an enormous undertaking, be sure to retain the services of a qualified Realtor. You can trust our Realtors to always keep your interest first and foremost. As qualified professionals, they’ll guide you through the entire home buying experience and assist you in being an informed buyer.

Simplify Your Search

What features do you require in a home to satisfy your lifestyle now and in the future? Knowing your range of affordability is imperative. Once you know it, you can explore all your needs: from design preferences to neighborhood choices.

Moving Forward

Once you have found the home that is right for you, move forward to present an offer. This will consist of earnest money to be held in an escrow account and a written 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 your interests.

Final Steps

Upon your complete satisfaction, arrangements will be made to attend a closing. Coordinating the closing will usually be a title company who has your escrow money in account. After furnishing the down payment and whatever other applicable fees have been agreed upon prior to closing, final papers will be signed. The deed and mortgage will need be recorded in the state Registry of Deeds, and you will be a homeowner.

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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 buying process can be stressful and frustrating. With our online resources, you can avoid the pitfalls and 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 do15- vs. 30-year terms compare?
  • What are points and do I pay them?
  • What is difference between a fixed rate mortgage and 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?

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Make Your Mortgage The Right Fit!
Mortgages to meet everyone’s needs. These summaries will help you narrow your search.

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

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.


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

A conventional home mortgage, or first mortgage, that allows lenders to give loans up to a specified amount (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

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.


Two corporations established by congress and owned by stockholders, they are commonly referred to as Freddie Mac (Federal Home Loan Mortgage Corporation) and Fannie Mae (Federal National Mortgage Association). These corporations buy mortgages from lending institutions, pool them with other loans, and sell shares to investors. Detailed information may be found at or

Federal Housing Administration (FHA)

An agency of the federal government within the U.S. Department of Housing and Urban Development. The FHA sets standards for the underwriting of private mortgages and insures residential mortgages made by private lenders

Federal Housing Administration (FHA) Loans

Low-rate loans that are available to Americans with smaller incomes who are interested in modestly priced homes. Down payment requirements are usually lower than the prevailing ones.


Fixed-Rate Mortgage

A loan in which the interest rate, 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)

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, which is thereby paid off in a shorter number of years.

Renegotiable Rate Mortgage (RRM)

A mortgage that allows the interest rates and payments to be adjusted periodically according to an index (similar to an ARM).

Reverse Annuity Mortgage (RAM)

A 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)

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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Know Your Needs

Drive To Learn

Evaluate as you drive though a 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 which 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 real estate agent 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 Sales Associate 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 ask you to resubmit a 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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Contract Review

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 company – either a title company or attorney must be agreed upon by buyer and seller
  • Details of the closing, when and where
  • Home inspection – to ensure again structural and unknown defects, to be completed in a specified time period
  • Inclusions and exclusions – examples would include washers, dryers, drapes, etc.
  • Pest Inspection – and 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 past a test, if applicable
  • Date of possession – when you take possession of the property
  • Acceptance date – either an acceptance or counter-offer must be responded to by a specified date

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Processing the Sale

Once the contract is signed, your Sales Associate 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:

  • Schedule 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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The benefits of owning a home

  • Over the past 30 years, home prices have risen more then 6 percent annually
  • On average, the value of a home nearly doubles every 10 years.
  • 60 percent of the average homeowner’s wealth comes from their homes equity.
  • The average homeowner’s net worth is $171,000 – that’s nearly 46 times that of a renter’s, who has an average net worth of $4,800.
  • Homeowners benefit from the power of leverage. At an annual appreciation rate of 5 percent, a 10 percent down payment on a home will return 94 percent after 3 years. After 5 years, the rate of return increase to 225 percent and after 10 years, 623 percent.

Source – NAR existing home sales historic series.

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