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How to buy a second home

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second home header1Lake season is here! If you are considering purchasing a vacation property, now is a great time. No matter what type of vacation property – lakeshore, rural or urban — you’ll follow the same basic steps when it comes to financing a second home. Here are some things to consider as you purchase a second property.

Setting a budget:

When financing a second home purchase, it’s essential to get in touch with a mortgage consultant BEFORE you begin your property search.

Together with your mortgage consultant, we will help you determine a budget that takes into account:

  • Maximum mortgage payment
  • Annual homeowner’s insurance policy
  • Taxes

While these additional expenses are not factored into your mortgage scenario, other costs to keep in mind are travel costs – to and from the property, regular maintenance & repairs, utilities, furnishings and household items.

Financing a second home:

While some people can afford to pay cash for a vacation home, financing makes more sense for a majority of future second homeowners. Here are two options to consider:

Conventional Loan:

Financing a second home is different than purchasing a primary residence. FHA home loans are not an option since they can only be used to buy a primary residence. That leaves a conventional loan, which you have to qualify for on top of any mortgage debt on your primary home.

Typically, you will need to make a down payment of at least 10 percent, meet credit standards and debt-to-income requirements, and provide documents for income and asset verification.

Cash-out Refinance:

Home values are on the rise across the country. Because of this, many homeowners have built substantial equity in their primary residence in just the past few years. Cash-out refinancing can be an excellent way to liquidate your home equity and then use it to purchase a vacation home.

Rental vs. Vacation Home

For some, owning a vacation home may sound like an unattainable dream. But, with the rise of services like Airbnb, it is now easier than ever to receive occasional rental income.

If you do plan to rent the property out, know that financing is different for rental homes and vacation properties. Qualifying is more straightforward when purchasing a property as a second home.

Finding your dream

The market for lake homes is heating up, and new properties are being added to the market daily. If you are not already working with an agent, we would be happy to recommend some REALTORS that specialize in lakes country. They will take the time to help you find your perfect home away from home.

Once you have found a property, your First Class Mortgage consultant will help you determine the best way for you to purchase it.

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Q&A: Lawn Watering Secrets

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sprinkler-2366751_1280QUESTION: Does it make a difference what time of day I water my lawn?

ANSWER: The best time to water your lawn is between 4:00 a.m. and 10:00 a.m., when the air is cooler and wind light. Midday warmth evaporates water too quickly. Evening watering may cause fungus and other lawn diseases since water can cling to grass overnight.

Here are some other important tips to keep in mind:

Water a maximum of twice per week. Sandy soils require every three days. Clay soils require once per week as they hold more moisture.

Soak soil 6 inches down. On first watering, measure depth every 15 minutes using a shovel. Then, time sprinklers to deliver the proper amount.

In-ground sprinklers are best. The next best for established lawns are pulsating, revolving sprinklers. New lawns need oscillating sprinklers as water lands softer and won’t push seeds away.

And remember always to follow your local watering ordinances.

Source: Popular Mechanics

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Troubleshoot Your Air Conditioning

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ACrepair If your air conditioner struggles to keep up when temps hit record highs, check these common symptoms before calling for a repair.

It’s a no-go: If your air conditioner does not seem to be functioning at all, the most common culprit is a tripped circuit. Check the breaker box first.

Rooms are too warm: Check for open windows and detached or damaged weatherstripping, including around window AC units.

Air moves too slowly: AC units aren’t as efficient with dirty filters or floor registers. Filters on central units should be cleaned or replaced once a month during the summer, especially if you have pets. Floor registers should be vacuumed regularly and kept free of obstructions like furniture, plants and throw rugs.

Pan overflow: The drain pan below interior air conditioning units collects condensation, which is then drained by an electric pump. If the pan is overflowing, inspect the drainage line for kinks or blocks.

Running constantly: Ambient heat distributed by lamps and televisions near the thermostat can cause over-performance, as can sunlight falling directly on or near the thermostat or window unit. Keep blinds and shades drawn during the day to prevent your thermostat from registering a warmer temperature.

Owners manual check-in: You can usually troubleshoot many issues yourself. If you’ve misplaced the original owners manual, check the manufacturer’s website for a replacement download.

Most air conditioning problems are due to lack of regular maintenance. So save time and money with annual inspections by a qualified HVAC professional!

Sources: Consumer Reports, Trane

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Your Mortgage, What to Expect: Clear To Close

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You’ve given the underwriter every piece of information they have asked for and FINALLY, your loan is CLEAR TO CLOSE! So, what exactly does that mean?!

What does clear to close mean?

Clear to close (CTC) is one of the final stages before your loan is funded. CTC means that the underwriter has reviewed and approved all necessary documents and you’ve passed with flying colors. In other words, the lender is ready to show you the money!

Your Role at the Closing

In a real estate transaction, the term closing is synonymous with signing. The name of this process comes from the fact that the escrow account that you were using to complete the home buying process will now close. During closing (also called settlement or account settlement), you will have to review, authorize, and date numerous legal documents.

While this process may seem tedious, the end result of homeownership is well worth the effort. Being prepared and staying organized can help ensure that your closing is quick and easy. Here are six important things you need to do before you even sign your first closing document:

  • Confirm the time, date and location of your closing.
  • Assemble any documents that you may need to refer to during closing. These can include your contract, proof of title search and insurance, flood certification, and proof of homeowners insurance.
  • Confirm that any repairs mentioned in your contract have been completed, which may include a walk-through of the home you are buying 24 hours before closing.
  • If you will be paying your down payment or any closing costs at closing, make sure that you have a check or other acceptable form of payment ready. It is important to check with your mortgage consultant to verify what types of payments are acceptable since, in some instances, a cashier’s check or wire from your financial institution may be required.
  • Remember to bring your driver’s license or other government-issued ID to closing.

Ready to get started? Give us a call or fill out an online application: APPLY ONLINE HERE

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Twins Cities Region Monthly Indicators – APRIL 2018

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Many sellers and builders are in a good position for financial gains, as the economy continues to favor putting existing homes on the market and building new homes for sale. We are finally beginning to see some upward movement in new listings after at least two years of a positive outlook. There may not be massive increases in inventory from week to week, but a longer-term trend toward more new listings would be a good sign. Low inventory should continue to create a competitive situation for buyers, causing price increases over the next several months.

Quick Stats: MGstats_april2018

  New Listings in the Twin Cities region decreased 7.2 percent to 7,321.
  Pending Sales were down 6.6 percent to 5,684.
  Inventory levels fell 25.1 percent to 8,958 units.
  Median Sales Price increased 8.6 percent to $266,000.
  Days on Market was down 10.2 percent to 53 days.
  Months Supply of Homes for Sale was down 25.0 percent to 1.8 months.


This winter and spring exhibited unseasonal weather patterns in much of the country. As the seasons change to something more palatable, wages and consumer spending are both up, on average, which should translate positively for the housing market. Being quick with an offer is still the rule of the day as the number of days a home stays on the market drops lower. Along with the purchase market, buyers should be aware of pending mortgage rate increases. Acting now could potentially help them secure a lower interest rate.


Source: Minneapolis Area Association of REALTORS®

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