Last year, 717,000 people purchased vacation homes, according to an estimate by The National Association of Realtors.
Sound interesting? Here are some quick facts about getting a mortgage for a vacation home:
* Down payment required is at least 10% of the purchase price.
* Your debt-to-income ratio will include your current mortgage, installment loan and credit card obligations, and the new proposed payment for the second home loan, including property taxes and insurance.
* It needs to be a true vacation home and not a rental property disguised as a vacation home.
A vacation home might make sense if:
* Your primary residence is paid off or your income can easily handle a second mortgage.
* You are nearing retirement age and want to secure your retirement home now while interest rates are so low.
You should not buy a vacation home if:
* Your current income is tight.
* You have insufficient liquid funds for emergencies.
* You would get bored of going to the same place on vacation time and again.
Never buy a vacation home (or any home, for that matter) on impulse. Take your time to select the right location. Make sure you scout out the local area. And visit the property in person before making a final decision.
If you’d like to explore further, talk to your mortgage loan officer about a pre-qualification, then contact your Realtor for available homes.