When it comes to finding the perfect vacation home, whether that’s a condo or a house on the beach, before you choose you should know what your second home mortgage options are so that you can make the best decision for your long term financial health. What does that mean? It means getting your facts straight and seeking the advice of a trustworthy, diligent personal loan officer who will place your interests ahead of their own.
Some of the Facts About Buying a Second Home
There are generally very few restrictions on the homeowner so long as their current income qualifies them for a loan and they have a credit score of at least 640. Most banks will charge you a 10% down payment. For a $300,000 home this would be $30,000. You need to take this into consideration before you can know what kind of vacation home will be affordable for you. Also note that the interest rates for a second home are close to the interest rates that would be offered for a owner-occupied home, if slightly higher.
Your only mortgage option is a conventional loan. FHA loans and other non-conventional loans with low down payment options, no closing costs, and lower income and debt requirements will not be available for you unless you plan on moving to this second home and making it your primary residence. In this case, you will need to discuss purchasing a primary home while you attempt sell your existing home with a mortgage broker. Note that you cannot take out on FHA loan on more than one property at a time.
Getting a second home mortgage when Buying a Condo
There are important differences between buying a condo and buying a house that you should think about before deciding what you would like to buy. There are some very nice beachfront Condos that are not approved by Fannie Mae or Freddie Mac. This means that the condo will not be approved for conventional loan financing, which is really the only loan option you can use when purchasing a vacation home. Therefore, there’s a chance you will not get the financing you need to purchase if you try to buy property there.
The answer to this dilemma is to research the property and make sure it is approved by FMAC or FMAE prior to seeing the property and falling in love with it. All too often buyers will follow these steps in reverse. They visit the property and check out everything else about it before they seek financing counsel and realize the property is out of their reach. The last thing you want is to spend time and money finding that perfect condo on the beach, only to discover it will not be approved under the conventional loan guidelines for a second home. This generally only applies to certain condominiums, but doing your homework before you approach a seller is always a good idea.
Fl Home Funding can help you find the perfect funding solution for buying a second home or vacation property.
If you have always had a dream of owning a vacation home, there has never been a better time to buy. Historically low rates and deflated property values provide you the opportunity to own that perfect vacation home at extremely low monthly payments.
Call (407) 704-8729 to speak with a licensed mortgage professional or complete the fast quote form now.