When you already have a home of your own, buying a second home is more of a choice than necessity. So, the way you go about buying and financing one of these is also quite different. You tend to be more selective from various choices and review every aspect associated with the transaction in detail because you have the time and lack of urgency to do so.
Financing options
Steve Morgan at Bethany Beach Lender explains the differences in purchasing a second house. Interest rates and monthly payments are higher on these houses because lenders are aware that this is not your first home and you are not too worried about losing your shelter if mortgage payments are defaulted. So, they keep their payments high to keep their lending risks low. Show them your commitment to keep up payments by making larger deposits on the home. While other application procedures such as income and credit checks remain the same, the terms on which the loans gets approved differ.
You can choose to refinance on your first home, but only if you are confident that you can keep up with the increased mortgage payment on that along with the new commitment you will have in the form of your second home mortgage payment. Larger down payments can make you eligible for short term finances for about 15 years at low APRs. Others can go for the traditional 30 year mortgages. Many banks are happy to lend for such houses too, and as always, hiring a mortgage broker to deal with the shopping around, negotiations, and several application and closing documents makes the process all the more simpler and quicker.
Keep the loan term short so you can enjoy good mortgage rates, and go for this option if you know you can keep up with the payments. Try to avoid putting additional liens on your primary home and if you are a retired person, think more carefully before you use up your saved money in this venture. All said, with many people choosing to smartly invest their spare money in this manner and to have tax benefits, if applicable, buying second homes are a popular trend.
Financing options
Steve Morgan at Bethany Beach Lender explains the differences in purchasing a second house. Interest rates and monthly payments are higher on these houses because lenders are aware that this is not your first home and you are not too worried about losing your shelter if mortgage payments are defaulted. So, they keep their payments high to keep their lending risks low. Show them your commitment to keep up payments by making larger deposits on the home. While other application procedures such as income and credit checks remain the same, the terms on which the loans gets approved differ.
You can choose to refinance on your first home, but only if you are confident that you can keep up with the increased mortgage payment on that along with the new commitment you will have in the form of your second home mortgage payment. Larger down payments can make you eligible for short term finances for about 15 years at low APRs. Others can go for the traditional 30 year mortgages. Many banks are happy to lend for such houses too, and as always, hiring a mortgage broker to deal with the shopping around, negotiations, and several application and closing documents makes the process all the more simpler and quicker.
Keep the loan term short so you can enjoy good mortgage rates, and go for this option if you know you can keep up with the payments. Try to avoid putting additional liens on your primary home and if you are a retired person, think more carefully before you use up your saved money in this venture. All said, with many people choosing to smartly invest their spare money in this manner and to have tax benefits, if applicable, buying second homes are a popular trend.
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