Admin001
If you’ve been debating buying a second home now is the time to take the leap. While housing prices are recovering in most of the country they are still much lower than they were before in many places and interest rates are still at historic lows. Of course, a second home means a second mortgage, but this isn’t as daunting as it sounds, especially if your first mortgage is mostly or entirely paid.
Getting your second mortgage
Getting a second mortgage is a lot like getting a first mortgage. Lenders are looking for all the same requirements. The biggest difference is that you must qualify for a second mortgage on top of any existing mortgage debt. The less existing mortgage debt you have the more likely you are to get a second home.
Most lenders require at least 10% down on a second mortgage and some require 15% or even 20% depending on your creditworthiness. They will also require proof of income and all stated assets. Lenders will carefully assess your debt to income ratio, income, assets, and creditworthiness to decide whether or not you can be trusted with a second mortgage.
If you’ve developed a good relationship with the lender who provided the mortgage on your primary residence starting with them is often the best idea, but it’s still worth shopping around a bit before you choose a permanent lender. So long as you have good credit it’s pretty simple to get a mortgage for a second home and you might even be eligible for jumbo financing. There are lots of different options when you’re looking to purchase a second home.
It is generally not recommended to tap your home equity for any portion of a second mortgage because it means you won’t be able to access that money in the event of a financial emergency later on. A second mortgage is only worthwhile if you have a secure safety net that will allow you to pay both mortgages should things go sour.
The bottom line
Saving up for a down payment on your second mortgage might be difficult but getting a second mortgage is often easier than getting your first one was. If you’ve already got a down payment and a good relationship with your mortgage lender that vacation home is well within your reach.
