Property Records of Minnesota Breaks Down 5 Important Planning Tips Every Real Estate Loan Officer Needs

June 01 19:29 2022

Property Records of Minnesota is a Minneapolis-based company that generates detailed property history reports for new or current homeowners that want to know more about a certain property. The report shows how the property has changed over the years. It also details if the house is worth the asking price. By having these details available the potential homeowner can make a wise decision to buy or to pass.


Reserve Funds

It is becoming increasingly difficult to use business assets to qualify for reserve funds. Many lenders will require a CPA letter stating that it will not hurt the business to take the funds out or will not allow people to use them at all.

Beginning December 1, 2016, many loan offices will no longer accept CPA letters to use business assets to qualify for personal loans. This is going to make it next to impossible to use business assets so recommend keeping enough reserves in personal accounts to qualify for the loans. If someone chooses not to do that, then he or she will want to move money from business accounts to personal accounts four months before the loan is expected.

There are times that the underwriter will want to see up to three months of bank statements, and do not want to show the underwriter a large transfer on any of the statements they look at.

The County Records Will Be Updated

A lot of people just learned this and it can be especially painful if someone owns rental properties and is trying to buy a primary home. The problem might come from the records on each of the rentals with the county. Both the title AND the mailing address are important.

The buyer needs to have the mailing address different than the property or it could be a red flag to an underwriter. It is something the buyer can get through but could create headaches so it is best to update the mailing address on all the rental properties. This is often overlooked if someone has a mortgage company escrow and pas insurance and taxes.

The way someone holds the title is also important. Using and corporation or LLC is fine but be prepared to prove that someone owns the company. Also, the buyer will want to hold the title in the buyer’s personal name on any property he or she is refinancing. If the buyer is planning to refinance a rental that is currently in the LLC go ahead and deed it back to oneself before applying for that loan. Again this is something that the buyer can normally get around but it will make the process much easier if it is done upfront.

Don’t Even Think of Under Pricing The Property in the MLS

This is a big one that buyers and sellers see a lot. Tell me if this sounds familiar. An investor buys a house and fixes it up to sell.  It does not sell so she lowers the price several times. Finally, she realizes that her best option is to refinance and keep the house so she takes it off the market and starts the refinance process.

The highest appraised value she can hope for is the lowest list price. My suggestion is to drop the price down to where the buyer needs it to appraise and if it does not sell at that price start refinancing. How can the value of the house be more than what it was listed for if it did not sell?

What Does the Buyer Do For a Living?

Underwriters hate real estate and real estate-related professionals. There is probably some merit behind their concerns as our industry has been decimated since 2007. This might surprise some people but many underwriters will deny a loan just because of the profession someone is in.

The good news is buyers have some control over the underwriter’s view on what people do for a living. If a person is self-employed it is best to form an LLC or Corporation and try to keep the real estate out of their name. Underwriters really hate investors so keep anything related to investing out of the name. Examples of bad business names are John’s Investing, Jane’s Home Buyers, Kyle’s Property Investors, etc. Also when asked what someone does for a living don’t say, real estate investor. It is best to say something like business development, consultant, or manager.

Schedule E

This one is a bit more complex and is where homeowners really want to work with a mortgage broker. It is all about making sure the Debt to income ratio (DTI) is in line. Again if the buyer doesn’t know what DTI is check out the article. There is one simple thing people can do to control the number of write-offs with a property and is especially easy during the first year of owning something. It has to do with the way homeowners enter improvements or repairs. 

Most people will make a repair and expense 100% of it. For example, if the homeowner replaces the water heater for $500 and the homeowner takes a $500 deduction. That is not necessarily the wrong way to do it and the buyer will pay fewer taxes that way but another way to enter that same $500 is to add it as an asset to the balance sheet and deduct that $500 over several years.  That way the buyer is not taking the full $500 loss in one year.

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Company Name: Property Records of Minnesota
Contact Person: Customer Service
Email: Send Email
Address:2801 Hennepin Ave S #301
City: Minneapolis
State: MN 55408
Country: United States