Options for Financing Your Vacation Home
With J.G. Wentworth, you’ll be pleased to discover that the process of evaluating your vacation home financing options may differ from what you initially expected. That’s because our home lending specialists have experience in virtually every facet of home lending, giving them a firm understanding of the nuances involved when it comes to vacation home mortgages. For example, did you know that there are multiple options when it comes to vacation loans? Here are two of the most popular:
That’s right: Sometimes, when it comes to vacation home mortgages, the conventional approach is best. While requirements vary on a person-to-person basis; borrowers who choose this method should be prepared to put a downpayment of 10-30% (depending on things like credit, income, etc.). And, it’s important to note that securing a vacation home loan differs from your first-time home buying experience. Not to worry, though; our home lending specialists will walk you through everything, answering any questions along the way.
Taking Equity From Your Home
For some, the journey to acquiring a vacation property is best completed via cash-out refinancing. Simply put, this avenue involves taking cash out of your current home’s equity and using it to purchase your vacation home. If you choose this approach, you’ll only have one loan for both properties. Be sure to remember that your debt-to-income level plays a pivotal part in this option.
Credit ScoreThe higher or lower your credit score often plays a role when lenders decide your vacation home loan’s terms. Don’t let that intimidate you, though -- you may have other things in your portfolio that you can use for consideration.
Down PaymentThe amount of money you put down will influence your vacation home mortgage. One key way it does so is reflected in your monthly payments. Usually, the higher a down payment is, the lower the applicant's monthly payments tend to be.
Cash on HandVacation home loans are considered second home mortgages, which means that the value of your liquid assets at the time of application will likely need to be greater than they were when you bought your first home.
Debt-to-Income RatioSimply put: Your debt-to-income ratio measures the difference between your current debt obligations and potential mortgage against how much money you earn. This is a critical factor in the vacation home loan application process, because the more money you have leftover after this calculation, the more favorable your status will be as an applicant. While you can’t fully know what to expect without one of our home lending specialists, we invite you to use our mortgage calculator to project your mortgage expense capabilities.
Proof of Your Vacation HomeAs we mentioned before, mortgages for vacation homes differ from other kinds of home loans. In order for your property to be recognized as a legitimate vacation home, you’ll need to spend more than 14 days per year in it; or, if you rent it out, you’ll need to live in it for 10% of the time for which it is rented in order for it to qualify. For example, if you rent your home for 200 days in a year, you’ll need to spend at least 20 days in it over the course of the same year in order for it to maintain its status as a vacation home.
Ready to Take the First Step Toward Buying Your Vacation Home? J.G. Wentworth Can Help.
Although vacation home financing differs from other kinds of home lending, there is no need to let that stop you from getting the vacation home of your dreams. Why? Our home lending professionals always get to know the wants of each individual borrower before navigating them through the vacation home loan process. This approach helps us tailor your options to your goals and ensures you understand everything that’s happening along the way. Even if you think you won’t qualify for a vacation home loan, don’t let that stop you from trying, because our home loan specialists see the “big picture.” While some parts of the process are automated for the sake of convenience, algorithms and technology don’t have the final say in whether or not you get approved for a vacation home mortgage: Our people do.
Contact us today to take advantage of low mortgage rates on vacation properties.