Freddie Mac recently predicted that 2016 might be the best year for housing in a decade with most sectors, sales, construction, and prices, set to reach new recent highs. They base this on several factors, mortgage rates, employment, household formation, rising home inventories and increasing prices. Second homes are not as rare as one might expect. In fact more than 20% of residential home purchases in 2014 were for secondary residences. The numbers are rising and it’s important for those considering to understand that financing a second home is a bit different than financing the purchase of a primary residence. Nevada’s great tax benefits and improving economy, along with securing a home as a place to retreat and enjoy life’s simple pleasures are just a few of the reasons why many choose the Tahoe area to invest in real estate. If you’re thinking of buying a second home soon or in the future, align yourself with a knowledgeable, trusted mortgage lender who will provide transparency of the process and guide you now on steps to make qualifying easier.
Prepare a Down Payment
As a mortgage on a vacation property is considered higher risk, many lenders require buyers to have a larger down payment – generally 20%. There are potential options for securing cash such as taking cash out via a refinance on your primary residence while rates are still low. In fact, recently, the share of cash-out refinances were the highest since 2008. Alternatively, you may want to consider taking out a home equity line of credit (HELOC) on your primary residence to finalize the purchase of your secondary residence. In many cases, a gift from parents or family is OK to use for a down payment, as well.
If you plan to use your second home strictly for personal use, then you are likely going to be able to secure an interest rate that is comparable to that on your primary residence. As mortgage rates are still low; it is a good time to finance the purchase of a second home. Please note that if the second home purchase is for investment reasons, you may be locked into a higher interest rate – an increase of about .5%.
Qualifying
Qualifying to buy a second home can be trickier than qualifying for your first home. If you’re self employed it’s always better to capitalize verses expense when possible, and if you’re employed, think twice before filing a 2106 “Un-reimbursed Employee Expenses” form with your taxes. It’s imperative to get pre-approved or consult early with a mortgage professional in the earliest stages as you ponder buying your happy place.
David Colarchik
Branch Manager NMLS #300510
775.832.6522
264 Village Boulevard, Suite 2B
Incline Village, NV 89451
TahoeLending.com
Text ‘Dave’ to 313131 to
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Disclaimer:
The views and opinions expressed on this site about work-related matters are my own, have not been reviewed or approved by Supreme Lending, and do not necessarily represent the views and opinions of Supreme Lending. In no way do I commit Supreme Lending to any position on any matter or issue without the express prior written consent of Supreme Lending’s Human Resources Department.
Branch Manager: David Colarchik
Main: 775-833-7100 | Direct: 775-832-6522 | Fax: 775-833-7108
264 Village Blvd Suite 2B, Incline Village, NV 89451
David.Colarchik@supremelending.com
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