Top 5 Tips for Financing or Refinancing Your Home

Whether you are looking to finance a new home or refinance an existing one, it can be a daunting task to navigate the world of lenders, interest rates, and repayment terms. However, with some research and guidance, you can make the process a bit easier on yourself.

Four Components of The Average Home Loan

A typical loan for financing a real estate purchase consists of four main factors: downpayment, principal loan amount, interest rate, and terms. The downpayment is the money you invest in the home upfront; the more you pay upfront, the less you will need to borrow. The principal loan amount is how much money you are borrowing and the interest rate is how much interest you will pay on that borrowed sum. Finally, the terms designate how much you will pay back over a period of time.

Factors Lenders Consider to Assess Your Financial Responsibility

When lending money for a home, lenders will consider several factors from your personal finances: your credit score, your debt-to-income ratio, and your downpayment or equity. The higher your credit score and the lower your debt-to-income ratio, the more financially responsible you appear to lenders. The higher your downpayment or home equity, the lower the risk is for lenders because you’ve put more on the line.

Top 5 Tips for Financing or Refinancing Your Home:

Lenders want to see that you are a trustworthy and responsible home buyer. The more responsible you are, the lower the risk for the bank when loaning you money. There are a few major factors for how they calculate your financial responsibility:

  1. Improve your credit score. Paying down debt, making on-time and consistent credit card payments, and paying more than the minimum due can all improve the health of your credit score. You can also seek to resolve errors or flags in your credit history.
  2. Reduce your debt-to-income ratio (DTI.) Your DTI represents how much debt you have vs. how much income you have. An ideal rate is 36% or lower, meaning you should be bringing in about 3x as much as you have in debt.  
  3. Increase your down payment. The more you can pay for your home upfront (or the more equity you have in your home, if refinancing) the better your loan options will be. A great goal is paying at least 20% of the home’s value as a downpayment.
  4. Shop around! You can (and should) consider multiple loan options from multiple lenders. There are online tools for comparing loans on your own, and there are also mortgage brokers whose whole job is finding you the best option!
  5. Search for government programs. There are many programs available for first-time homebuyers, low-income homebuyers, buyers in rural areas, buyers of energy-efficient homes, veteran homebuyers, and more. Do some research, talk to a mortgage broker, and be sure you’re taking advantage of any programs you might apply for!

Financing or refinancing a home is a complex process, but with these tips in mind, you can find the best options for your needs. Remember to do your research, shop around for rates, and always read the fine print before signing on the dotted line. Once you’ve secured your financing, contact Bill Hansen Realty to find your dream property!

Trouble with Commercial Property Shopping? You Deserve an Expert.

Buying commercial property can be a wise investment that offers long-term financial benefits. However, purchasing a commercial property is a complex process that requires specific knowledge. Here are some things you will need to know about when buying commercial property.

Major Differences Between Buying Residential and Commercial Properties

Buying commercial property is vastly different from buying a residential property. Commercial properties are often more expensive, and they require a much larger investment. Moreover, commercial properties are usually purchased with the intent of running a business or generating some sort of income. This introduces other new factors such as zoning, permitting, and licensing. For these reasons, buying and selling commercial property requires specialized knowledge and experience.

Special Considerations: Commercial Property Conditions and Zoning Regulations

It’s important to understand how zoning laws and local regulations work when buying commercial property. Zoning regulations dictate what types of businesses can operate on a property and can vary from one location to another and from one business to another.

You should also be mindful of the condition of the property you are purchasing. Commercial properties often have more wear and tear than residential properties due to heavy usage. Be sure to also explore any potential environmental concerns, as commercial businesses can have harsh effects on the property’s natural resources. You should inspect the property thoroughly to ensure that it is in good condition and that you are aware of any past issues or future repairs or renovations that may be necessary.

Commercial Property Expertise and Market Research

When buying commercial property, it is essential to have a team of experts on your side. These experts can include real estate lawyers, accountants, and contractors. They can help you navigate complex regulations and ensure that you are making a wise investment. They can also help you to understand the state of the market, which will inform your decision-making process. You should research the local market and understand the trends and potential for growth in the area.

Commercial Property Financing and Rental Income

Commercial property financing is another component that is distinct from residential. Be sure to consider all of the various financing options and choose the one that best suits your needs. If your commercial property is going to generate rental income, you can consider that as part of your overall income when applying for financing. However, like all sources of income, it must meet eligibility criteria and be properly documented.

Buying commercial property is a significant investment, and it requires specialized knowledge and expertise. By understanding the differences between buying residential and commercial property, you have gotten a strong start. The most critical tip for success is finding trusted expertise – whether that is a realtor, broker, lawyer, or other advisor – it’s critical to get support from industry experts. Bill Hansen Realty is one of these experts and we would be happy to be a part of your team!

Make a More Powerful Offer with a Mortgage Pre-Qualification

Obtaining a mortgage is an essential part of the home buying process, and pre-qualification can be an easy first step. Being pre-qualified streamlines the home buying process and gives you an idea of how much banks may be willing to lend you. Here is what you need to know about getting pre-qualified for a mortgage:

What Does Pre-Qualified Mean?

Pre-qualification is the first step in the mortgage process. It’s an informal process that evaluates your debt, income, and assets based on self-reported details. Based on these details, pre-qualification gives you an initial estimate of how much you may be able to borrow. It is not a guarantee that you will be approved for a mortgage, but it can give you an idea of your purchasing power.

How Is Pre-Qualification Different from Pre-Approval?

Pre-approval, on the other hand, verifies the financial details you provide in pre-qualification; it is a more formal process that involves a hard credit pull. With pre-approval, the bank reviews your financial information and determines how much they are willing to lend you. Pre-approval is a stronger commitment from the lender, and it can make offers more attractive to sellers.

Does It Affect Your Credit Score?

Pre-qualification does not affect your credit score. The lender will ask for some basic financial information, but they won’t pull your credit report. However, pre-approval does involve a credit check, which can affect your credit score.

How to Calculate Your Debt-to-Income Ratio

One essential factor in determining how much you can borrow is your debt-to-income (DTI) ratio. To calculate your DTI ratio, first, add up your monthly debt payments. This should include all credit cards, car, personal loans, and tuition payments. Take your total monthly debt payment and divide it by your gross monthly income. Your DTI ratio should be below 43% to qualify for most mortgages.

What Are the Next Steps After Getting Pre-Qualified?

After getting pre-qualified, the next step is to find a lender and complete the mortgage application process. Your lender will review your financial information and determine if you meet their lending criteria. Once you are approved, you can house hunt with confidence, knowing you are ready to make an offer.

If you’re still hesitant about reaching out to a lender, there are numerous online resources available to help you estimate the amount you may pre-qualify for. By obtaining pre-qualification, you can assess the approximate amount of money that a lender may offer you toward your home purchase. This simple and vital step can help you determine your budget and kick-start your home buying journey!

8 Things to Look for When Viewing a Potential Property

Buying any real estate can be an overwhelming process but buying a cabin comes with its own unique considerations. Here’s what to look for when you’re viewing a potential property.

Cabin Location

It’s critical to consider the location and accessibility of the property. While you can make changes to the building and accommodations, you cannot change the property’s location. Is it in an area that makes sense for you? Is it far enough for a getaway, but also close enough to “home?” Are the access roads well-maintained?

The Changing of the Seasons

There are dramatic swings in weather in Northern Minnesota. If you plan to be heading up to the cabin in the winter, don’t forget to think about the snow! Be sure to ask about winter access and how the roads are handled. Some cabin communities provide snow management, others leave you to handle this yourself.

The Cabin or Vacation Home Lot

Making changes to the lot will come at a considerable cost and require a lot of work down the line. Be sure to look at how water flows, naturally, through the property. Are there areas where rainwater has washed out the landscape? Are there problematic trees or other concerns with the lay of the land?

Water Properties and Quality

Water is a huge consideration and something to stay aware of when viewing potential cabins, especially if you’re looking at a waterfront property. Be sure to research the water you’re buying near. You may want to research how high the water levels get, especially during the Spring thaw and major rains. Also, consider the quality of water in the lake, and what kind of systems are needed for treating it.

Cabin Building Blocks

If you’re looking at rustic or log-style cabins, the building materials and structure itself are something to pay attention to. Log cabins should always be raised off the ground by rocks, concrete or other materials. There should be no rotting, large gaps, or cracks among the logs. The roof should overhang the walls to protect logs from rain and snow.

Cabin Usage

Make sure there is room for everyone! Is this cabin going to be a quiet family getaway? Or a shared, multi-family property? How many people will be staying here at the same time? It’s important to provide a bed for everyone, even if it requires sharing rooms. Sometimes cabins have “bunk rooms” that can sleep 4 or more people in the same space.

Maintenance for Your Vacation Home

All properties require maintenance, but cabins are unique. They may be older buildings, made with different materials than our standard homes. Keep an eye out for how the property has been maintained. How well have the previous owners cared for the cabin?

Terms of Sale

Make sure you understand the terms of the sale agreement and what is included in the price of the cabin. Are you just buying the lot and the building? Are there any appliances the owner is willing to leave behind? Is there any outdoor equipment such as docks, boats, or other lake toys, that may be included?

Buying any property can be overwhelming but viewing cabins “up north” should be a fun and exciting experience! With a trusted team by your side, it’s easy to keep track of all these details and enjoy your property viewing experience!

3 Reasons Why You Should Invest in a Vacation Home

Real Estate is one of the most popular ways for individuals in the United States to build wealth and equity. If you’ve been looking for ways to earn more income, buying a vacation home might be right for you. Here are the reasons why we think you should consider buying a vacation home. 

Your Equity Will Grow

Just like your main living property, your vacation home will grow its own equity over the years. All you have to do is maintain your property and make occasional upgrades. It’s rare that a property decreases in value. 

You Can Rent Out Your Cabin

If you want to make some extra money, renting out your vacation home is a great way to do it. With services like Air BnB and VRBO, it has never been easier to make extra income on your property. Of course, you have to make sure you are maintaining and cleaning your space, and keeping your listing updated. But if you’re willing to put in a little work, the benefits can really start to stack up!

Save Money on Your Vacations

One of the most simple ways that your vacation home will keep a little extra money in your pocket is by saving you money on your vacations. With a designated Northern Minnesota vacation spot that you can escape to at any point, you’ll save on hotels and food when you stay and cook at the cabin!

We think lake life and vacationing Up North is one of the best ways to relax, unwind, and spend time with the people you love. Why not make it work for you by making some extra money. We’re here when you’re ready to invest in your vacation home. Take a look at our current properties to find the property that’s right for you.

Tips to Help You Prepare for Opening Your Cabin this Spring

There’s still a bit of time left before winter is over and we’re ready to start making our weekend trips to the cabin. But it is never too early to be prepared! We’ve pulled together some tips to help you get prepared to open your cabin this spring! 

Make a Plan

Decide what needs to be done and make a list for both the inside and the outside. Don’t forget to check on your licenses for fishing and boating as well. Verify what items need to be renewed or purchased. Also be sure to have a plan to turn on any services that you had shut off for the winter. 

Do an Opening Inspection

Upon arriving, test your smoke and CO2 detector batteries. Turn on water and heating and inspect for any damage to the exterior that might have happened over the winter. 

Check for Critter Damage

Look for holes in your screens, siding, gnawed wires, or rodent droppings, and create a plan for removing or exterminating.

Restock Necessities

Create a list of items that are must-haves in your cabin. Restock non-perishable food items, your first aid kit, and other emergency supplies. 
While it might feel like a long way off, Springtime and cabin days will be here before you know it! Until then, keep an eye on our hot list for the latest properties on the market!

4 Ways to Stay Safe at the Cabin this Winter

Many of us still love heading to the cabin during the Winter months, despite the cold and snow. But there is a lot more to consider when it comes to the safety of you and your loved ones. Here are some things you can do to prepare when you head to the cabin this winter. 

Have Alternate Heating Options

The cold Up North in Minnesota can be brutal. When the temperature hits below zero, or a big snowstorm sweeps through, there is a greater risk of power outages which means no central heating. Be prepared with alternate heating options such as battery-powered space heaters or heated blankets, wood for the fireplace, extra blankets, sleeping bags, and winter clothes. 

Pack an Emergency Kit

It’s never a bad idea to have an emergency kit packed with supplies for the whole family. Be prepared for any Winter emergency from extreme cold to heavy snow. Some helpful items to pack include first aid supplies, non-perishable food, flashlights, flares, blankets, long-lasting candles, matches or a lighter, and a small shovel.

Take a Buddy

Whatever you plan to do – whether a winter hike, going to town for supplies, ice fishing, etc. – don’t go alone. If you get injured, lost, or in a tricky spot, you have another person to call for or go for help or help you out of a sticky situation. If you aren’t able to take someone with you, tell someone where you’re going and about what time you’ll return so they know when to start worrying about you. 

Keep the Cabin Stocked

Have supplies at the cabin that last year-round. Make sure your pantry is stocked with canned goods and other non-perishable items. If you have a wood-burning fireplace or wood stove, make sure you are always stocked up on firewood. Always have extra warm blankets and clothing for everyone. Keep books and board games in the event that you get stuck at the cabin without electricity or cell service. 

Taking these simple measures can help keep your mind at ease during the winter months at the cabin. If you’re looking for a cabin to escape up to during the winter, check out our current properties for sale

Two Changes That Could Be Coming to the Housing Market in 2023

The pandemic caused some major changes to the Northern Minnesota housing market—especially in the vacation home market. More people were looking for escapes from their homes and cities and to spend time in nature. Fewer people were moving so, there was less inventory for buyers. This meant that sellers often had the upper hand, but also that rates for buyers were at an all-time low. As we move out of 2022 and into 2023 (three years after the pandemic began), we are seeing a shift. Here’s what you could expect from the housing market in 2023. 

There Will Be a Gradual Shift Toward Buyers

The “seller’s market” in the last few years has been tough on those looking to buy, even for those looking for vacation homes. But in 2023, there will be a sure, but gradual shift back toward a “buyer’s market”. That means that you’ll get better prices, and mortgage rates are predicted to stay relatively the same as they are now. You will also have more options to choose from and less competition when you make an offer! 

Rental Property Is Becoming a Lucrative Source of Income

Even if you’re looking for a vacation home to spend time with your family or friends, there are a ton of great opportunities to do long or short-term rentals to others for some extra income. With DIY rental apps such as VRBO and AirBnb, you can easily make your family cabin a substantial source of income. More and more people are opting for using these rental services instead of hotels when they travel so it could be a great way to make some extra money when you’re not at the cabin!If you’re curious about what else might be happening in the Housing Market in 2023, U.S. News has made lots of predictions for next year’s housing market. And as always, you can reach out to our team at Bill Hansen Realty to help guide you through buying your vacation home!

3 Reasons Why You Should Consider Having a Well Inspection

Are you considering purchasing a cabin Up North in Minnesota that has a private well? Or maybe you own a cabin with a well that you’ve never had inspected. Although Minnesota state law does not require a well inspection or water testing for a property transfer, it might be a good idea to get one anyway. Three things to look for include the condition of the well, the quality of the drinking water, and if there are any unused wells on the property.

Three Reasons You Should Consider a Well Inspection

  • A licensed well professional can visually inspect certain aspects of the well construction and pump installation to evaluate whether they comply with state code.
  • Drinking water testing can find common groundwater contaminants to provide information about the quality of the water and any potential health risks.
  • The inspector can search the property for unused wells that could threaten groundwater or drinking water if not correctly filled and sealed.

If you’re not sure about well inspections or how to go about getting one, contact our team and we can help point you in the right direction!

4 Frequently Asked Questions About Buying Your First Vacation Property

If you’ve never bought a second home before, you might have a lot of questions about owning a vacation property. Here are 4 of the most common questions about buying a vacation home to help you get started. 

Can I afford a second home? 

Buying an additional property is a big financial step. There are a lot of factors you need to consider other than just having a second mortgage. What are local property taxes like? How much should you set aside monthly for maintenance and repairs? How much will it cost to insure your new home? Do I want to rent it out when I am not using it? Before you get started looking, answer these questions for yourself and create a budget. Then you will be ready to start looking for your perfect vacation home. 

Should I rent out my vacation home?

One way that people manage to afford their second home is by renting it out when they are not using it. If you’ve dreamed of owning a cabin Up North, but aren’t sure you can afford it, this option might be good for you. Before making this decision, consider the extra work that you will need to put into renting out your second home – managing bookings, cleaning, coordinating with guests, and the potential of extra maintenance that can come with having short-term renters.

What are the benefits of buying versus renting a vacation cabin?

While renting can be a good option for many, it might not be the best financial investment in the long term. If you know that you and your friends or family like to go to the same spot multiple times a year, investing in a vacation home is a great financial move. You will likely gain equity in the long run and have the additional asset of a second property to add to your financial portfolio. 

Do I need to hire a real estate agent? 

While it’s not legally required or needed, working with a real estate agent has numerous benefits. When you work with a real estate professional you have access to their professional network and an expert in the legal pieces that are involved with purchasing a property, and more. Check out our blog Five Reasons Why Working with a Real Estate Agent Matters.

We’re excited that you are considering purchasing a vacation home! Our team is here to answer all of your questions! Reach out to us today to learn more about buying a second property!