Buying a Second Home

Thinking about buying a Second or Vacation home?

There are a few things to look into before committing to that stunning beach home you’ve always wanted to visit during the winter.

Can I afford a second home?

Before you make this major financial decision, you’ll need to find out if you can afford a second home. First, add up all the costs. Not just the costs that go into the purchase, but the costs that might not be immediately obvious. These include your down payments and monthly mortgage payments, as well as closing costs, utilities, property taxes, insurance, landscaping, travel costs, and other upkeep.

The differences between mortgages on primary residences and second homes

On your primary mortgage, you might be able to put as little as 5% down, depending on your credit score and other factors. On a second home, however, you will likely need to put down at least 10%. Because a second mortgage generally adds more financial pressure for a homebuyer, lenders typically look for a slightly higher credit score on a second mortgage. Your interest rate on a second mortgage may also be higher than on your primary mortgage.

Otherwise, the process of applying for a second home mortgage is similar to that of a primary residence mortgage.

Qualifying for a second home mortgage

Before you apply for a second home mortgage, review your credit score, assets, and income, just like a lender will.

To buy a second home, you’ll likely need extra money in reserve that could cover your mortgage payments in case you have a temporary loss of income. Well-qualified individuals likely need at least two months of reserves, while less-qualified applicants may need at least six months of reserves. One month of reserve funds should be enough to cover the monthly mortgage payment on both homes.

Debt-to-income (DTI) requirements for a second home mortgage may depend on your credit score and the size of your down payment. Generally speaking, the more you put down and the higher your credit score, the more likely your lender will allow a higher DTI.

Some homeowners might choose to offset their expenses by renting out their vacation homes when they’re not using them. Doing this could violate your mortgage terms because you are using the property as an investment instead of a true second home, resulting in a higher risk to the lender

To qualify as a vacation or second home, typically, the property must:

Z

Be lived in by the owner for some part of the year

Z

Be a one-unit home that can be used year-round

Z

Belong only to the buyer

Z

Not be rented, or run by a management firm

Z

NOT be in the same town you live and work in

Do you have any questions? We are here to help!

We understand you may have questions, as a responsible potential SECOND home buyer should!

Please feel free to also give us a call and schedule a time to sit with one of our Loan Officers and request a consolation for applying.
We are here to help, and Congratulations on taking the first step!

 

Derek Egeberg

Branch Manager

NMLS 180899

State Lic: AZ LO-0915245, TN 236104

PHONE: (928)246-0422

PHONE: (928) 247-9089

Brenda Hurtado

Loan Officer

NMLS: 2333849

State Lic: LO-1039337

PHONE: (928) 304-3183

Corey Seward

Corey Seward

Loan Officer

NMLS: 2137785

State Lic: LO-1026723

PHONE: (928) 247-9089 x33935

Ray Ochoa

Senior Loan Officer

NMLS 214114

State Lic: AZ LO-0915882, TN 238287

PHONE: (928)246-5937

PHONE: (928) 247-9089

Bill Craft

Sales Manager

NMLS 1621885

State Lic: LO-0942496

PHONE: (928)366-1639

PHONE: (928) 247-9089

Academy Mortgage Yuma - Robert Wright

Robert Wright

Loan Officer

NMLS# 1989817

State Lic: LO-1012538

PHONE: (928) 247-9089 X33917

PHONE: (928) 366-1637

Brian Aungst

Loan Officer

NMLS: 2031470

State Lic: LO-1038828

PHONE: (928) 514-1592

Rosa Castillo

Senior Loan Officer

NMLS# 799138

State Lic: LO-0944489

PHONE: (928)920-2831

PHONE: (928) 247-9089