Financing, Mortgages, and Closing Procedures
Mortgage basics
Minnesota is a lien-theory state: the borrower keeps title and the lender holds a lien. Mortgages, not deeds of trust, are the norm. Mortgage registry tax is 0.23% of the principal debt and is paid to the county.
Federal disclosures
Under TILA-RESPA integrated disclosure rules, the Loan Estimate is delivered within three business days of application, and the Closing Disclosure must be received at least three business days before consummation.
Closing mechanics
- The escrow or closing agent coordinates payoff, prorations, and recording.
- Seller pays state deed tax (0.33%); buyer and seller fees follow the contract, not custom.
- Title insurance: the lender's policy is required; the owner's policy is negotiated.
- Prorations of taxes, rent, and utilities run to the closing date.
Foreclosure
Minnesota allows foreclosure by advertisement (non-judicial) or by action. After the sheriff's sale the borrower has a statutory redemption period - generally six months, longer for some property types - before title vests in the purchaser.
Worked example
A $250,000 purchase with a $200,000 mortgage: deed tax = 0.33% × $250,000 = $825; MRT = 0.23% × $200,000 = $460. If the contract makes the seller pay the owner's title policy, allocate that cost by the contract even though local practice often differs.
Traps that cost marks
- Delivering the Closing Disclosure the day before closing.
- Treating MRT as a closing-agent fee rather than a tax.
- Forgetting the redemption period when advising an investor buying at a sheriff's sale.
- Assuming a buyer can waive the financing contingency after the deadline.