Three Tips To Get The Best Financing On Your Second Home Purchase
Are you buying a
property as your second home? Perhaps you are looking for a small
cottage or apartment where you can escape to for your vacations, or
maybe you want to have another home closer to your relatives?
Maybe you want to
rent out your second property and make a steady income from your
investment. Whatever the reason, a second piece of real estate can be a
fantastic investment. However, sometimes getting a mortgage on your
second home can present a challenge.
Generally, a
mortgage lender will have tougher standards for vacation home — or
second home — loans than primary home loans. This is because usually
when you are buying a second home your finances will be stretched
thinner and you will have less money to spare due to already paying a
mortgage on your primary home.
This additional
risk may mean that your second home mortgage can be more difficult to
close and likely could carry a higher interest rate.
Here are three tips to keep in mind that will help you to get the best mortgage on your second property:
Build up a decent amount of savings.
Your mortgage
lender will want to be able to see that you have a large amount of
savings in reserve so that you will have enough to pay for the mortgage
even if you were to lose your job or other income source.
Pay off any credit card or installment debt.
Many lenders will
be hesitant to approve your second home mortgage if they see that you
have a lot of debt on your credit card. They will want to see that you
have a low debt to income ratio so that you will be able to pay back the
loan.
Use your primary home as a resource.
If you have always
made your payments on time and you are well on your way through paying
off your first house, you may have equity to borrow against for some or
all of your second home purchase. Be careful here though. There
is a little known IRS regulation that requires the second home be
financed under it’s own home loan within 90 days of closing to get the
best tax advantages.
These are just a few tips to keep in mind in order to make getting a mortgage for your second property as easy as pos sible.
To find out more about investing in a second home or vacation property, contact your trusted real estate professional today.
www.lakeozarkpropertybuying.com
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