A vacation home or rental property can be a smart investment. However, a second home purchase can be a complex process, especially when it comes to qualifying for mortgages. Below are a few tips to help make your dreams a reality.

How to Buy a Second Home

1. Calculate the Down Payment

Mortgages for second homes tend to have higher interest rates and more stringent standards. While Federal Housing Administration (FHA) programs allow you to purchase a home with as little as 3.5% down payment, those loans are only for primary residences. For a second home, lenders will typically want at least 20% of the value of the home.

Knowing this, make lifestyle adjustments leading up to the purchase to save for the upfront payment, such as decreasing expenses.

2. Work With a Real Estate Agent

An experienced real estate agent is an invaluable resource, especially if you’re considering a home purchase in another state. The agent will know the local market to find the ideal property in a neighborhood that’s right for your purposes, such as areas with tourist attractions. They will also help negotiate a fair sales price.

3. Expect Maintenance Costs

Even though you might use it less than your residence, a second home comes with significant expenses. Before starting the house hunt, make sure you have savings to pay for the insurance, maintenance costs, and property taxes. Renting out the property when you aren’t using it generates income, but it may affect your eligibility for loans.
 

Working with an experienced loan officer will improve your chances of securing a home loan for your second house. Dan Main is dedicated to making the loan process as smooth and stress-free as possible. He has over 23 years of experience helping buyers throughout Colorado and Missouri achieve their dreams of homeownership with low-interest loans. Visit his website to learn how he helps with home purchases, follow news on Twitter, or call (636) 284-4144 to start the application process.

Dan Main: NMLS # 502036

Flat Branch Mortgage Inc: NMLS# 224149

947 Waterbury Falls Dr., O'Fallon, MO 63368

(636) 284-4144