Mortgage Pre-Approval and Home Loans in Minnesota

I'm Jeff Moran, NMLS #483943, licensed to originate mortgages in Minnesota through C2 Financial Corporation.

Minnesota closings are put together differently from the state I live in, and the differences are not cosmetic — they change who sits at the table, who pays for what, and which line items appear on your Loan Estimate at all. This page covers what to do first, and what to expect that's specific to Minnesota.

Start with the pre-approval, not the house

The work that makes a purchase calm happens before you find the property. A real pre-approval means your income, debts, and credit have actually been reviewed — not estimated from answers typed into a form.

• Your offer reads as serious. A seller weighing two comparable offers is not treating a documented pre-approval and an unsupported one as equivalent.
• Problems are cheap early. Self-employment income, a rental you're keeping, a co-signed loan — all straightforward in week one, all expensive in closing week.

You can run the first pass yourself before I know your name: see your numbers on the homepage. When you want the letter behind you, here's what actually goes into one.

A pre-approval is not a loan commitment. Final approval depends on the property, the appraisal, and underwriting the complete file.

Minnesota closes through a title company, not an attorney

Minnesota is a title-company closing state. A closer at a title or settlement company runs the closing, handles the escrow, and disburses funds. Attorneys are involved when a transaction calls for one, not as a matter of course on every residential file.

If you've bought in an attorney-closing state — South Carolina, Georgia, much of the East — this is the difference you'll notice first: there is no closing attorney's fee on the Loan Estimate, because there is no closing attorney. There's a settlement fee to the title company instead.

Two Minnesota taxes that surprise people

This is the part worth reading before you budget your closing costs, because neither of these exists in most of the states I lend in.

Mortgage registry tax. Minnesota taxes the recording of a mortgage, calculated on the debt secured by the mortgage. It's a state tax, set by statute (Minn. Stat. 287.035), and it lands on a purchase and on a refinance, because a refinance records a new mortgage. Some title companies label it "state tax stamps" on an estimate, which is why people occasionally don't recognize it. Only a handful of states charge a tax of this kind at all — here is which ones do, and which do not.

Deed tax. Minnesota also taxes the transfer of the deed itself, calculated on the sale price (Minn. Stat. 287.21). This one applies to purchases only — a refinance transfers no deed — and it is customarily the seller's cost in a Minnesota transaction, not the buyer's.

I'm deliberately not printing either rate here. They're statutory, which means the legislature can change them, and a number that's right today and wrong in two years is worse than no number. The closing-cost estimator prices both against your actual scenario, current figures, before anyone asks you for a document.

Who pays for the owner's title policy

Worth stating plainly, because it runs opposite to several states and it's real money.

In a Minnesota purchase, the buyer customarily pays for the owner's title policy — the one protecting the buyer's own equity. In South Carolina and a number of other states, that cost customarily sits with the seller. Custom is not law, and it can be negotiated in the purchase agreement, but if you're moving to Minnesota and budgeting from what your last closing looked like, this is a line that will move.

The lender's policy, which protects the lender's lien position, is required on every new loan in every state, including every refinance.

Buying, refinancing, or reaching your equity

• Purchase — conventional, FHA, VA, and jumbo, priced against each other rather than assumed.
• VA — full eligibility and entitlement detail here.
• Refinance and cash-out — a break-even question before it's a rate question, and in Minnesota the mortgage registry tax belongs in that math. How the purposes differ.
• Second mortgages and HELOCs — often better than a cash-out when your first mortgage carries a rate worth protecting. The comparison.

Common questions

Do you need an attorney to close on a house in Minnesota?

No. Minnesota closings are conducted by a title or settlement company rather than an attorney, which is the opposite of attorney-closing states such as South Carolina. Attorneys are brought in when a specific transaction calls for one, not as a routine requirement on every residential closing.

What is Minnesota's mortgage registry tax?

It is a state tax on recording a mortgage, calculated on the amount of debt the mortgage secures, established by Minn. Stat. 287.035. It applies to purchases and to refinances, because a refinance records a new mortgage. Some settlement statements label it "state tax stamps."

Is the Minnesota deed tax paid by the buyer or the seller?

The deed tax is calculated on the sale price under Minn. Stat. 287.21 and is customarily paid by the seller in a Minnesota purchase. It does not apply to a refinance, since no deed transfers. Customary allocation can be negotiated in the purchase agreement.

Who pays for owner's title insurance in Minnesota?

By local custom the buyer typically pays for the owner's title policy in Minnesota. This differs from several other states where the seller customarily covers it, so a buyer relocating from one of those states should budget for it. It is customary rather than statutory and can be negotiated.

Are you licensed to lend in Minnesota?

Yes. I'm licensed in Minnesota and in thirteen other states, originating through C2 Financial Corporation.