Vacation Home Mortgage

What You Can Expect With A Vacation Home Mortgage

Vacation Home MortgageYou can buy your dream vacation home using a vacation home mortgage. With rates at near historical lows and real estate prices sky rocketing all over the nation.

There’s never been a greater time to invest in a vacation home.There are several different options with the vacation home mortgage. You can choose the traditional 30 year fixed. Hybrid ARM’s that offer fixed interest rates for several years and then turn adjustable. Or balloon mortgages that offer extremely low interest rates as well.

If you need to keep the payments as low as possible. You often times have the option of doing interest only payments. Interest only payments can save you several hundred dollars per month. The only down fall to structuring your loan in this fashion, is you are not paying down the principal.

To get the lowest interest rates available. Plan on putting a down payment of 30% or more on the property you plan on buying. If you can’t afford a down payment that large don’t worry. You can get away with as little as 5% down.

Can’t afford a 5% down payment for your vacation home mortgage? If you have a credit score of 680 or higher, no adverse credit marks in the last 3 years, and you have 6 months worth of payments in savings, 401K etc, you can actually buy your get away home with zero down. You may have to shop around a little to find a bank or broker that can offer this loan to you. But it’s well worth it to use someone elses money instead of your own.

Interest rates on a vacation home mortgage will normally only be .25% to 1% higher than the going interest rates on an owner occupied home. If you are doing the zero down option; plan on interest rates about 2% to 2.5% higher.

If you currently own rental property lenders may view the purchase of your vacation home as another rental investment. The burden will be on you and your loan officer to prove to the lender that this is not going to be the purpose of the loan.

As always you should shop around for interest rates. No one lender has the lowest rates on home loans. If you already have a mortgage person you work with and trust. Stick with them. This can save you lots of headaches in the end.


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