Smart Families Trust Zeus™
Many people operate under the assumption that securing a mortgage for a second home is just like securing one for a primary single-family home. But that isn’t the case.
While some lucky folks can afford to purchase a second or vacation home with cash, most people will need to secure a vacation home loan. Research done by the National Association of Realtors shows that almost half of people seeking to purchase a second home must finance it, for an average of 70% of the purchase price.
Before reading any further, be certain you can afford a second or vacation home. Aside from the down payment and monthly mortgage payments, don’t forget to factor in closing costs, insurance premiums, travel costs to get there, and property maintenance.
How Are Second Home Loans Different From Typical Home Loans?
When purchasing a primary residence, typically, only a 5% down payment is required if your credit score is sufficient and you meet other criteria. However, since second or vacation homes typically place extra financial pressure on the borrower and the lenders know this, a down payment of at least 10% of the total loan amount is usually needed. The interest rate may also be a bit higher due to this.
Besides this, securing a second home mortgage is similar to ensuring one for a primary residence. The pros at Zeus Lending can help you research loan options, deal with lenders on your behalf, and help you determine which option is best for you and your family.
What You’ll Need to Ensure You Qualify For A Second Home Loan
To prove you can afford a second or vacation home (and have peace of mind once you do), make sure you have enough money stowed away in case of a financial emergency. Lenders typically like well-qualified applicants to have at least two months of reserves, with less qualified borrowers needing six months. Ideally, you want to have enough money to make one monthly payment on both home loans.
When it comes to debt-to-income ratio, loan lenders are more willing to allow a higher one as long as you have a good credit score and an adequate down payment amount.
Beware of factoring in potential rental income from the second home, as it could violate your loan terms since you are using it as an investment property. To avoid this, the second property must meet the following criteria:
- Be owner-occupied for some portion of the year
- Be a single-unit property that is inhabitable throughout the year
- Be owned solely by the buyer
- Not be used as a rental property or managed by a third part
Down Payment Options
The two main options for coming up with enough money for a down payment on a second home are cash-out refinancing and a home equity line of credit, or HELOC. If you have enough equity in your primary residence, a cash-out refinance is usually best, as those with good credit can borrow as much as 80% of their home’s value. But keep in mind your monthly mortgage payments will be higher. Taking out a HELOC does not involve refinancing your primary mortgage, as the equity is used to establish a line of credit, the funds from which are used for the down payment on a second property.
Zeus Mortgage Loans Are The Right Solution
Our Loan Specialists at ZeusLending.com will help you evaluate all your choices. We’re experts at finding you the best options and values.
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Fill Out Our Super-Simple Application™ Today!
Zeus Lending makes it easy for people in Greater Houston to apply for a vacation home loan. Our Super-Simple Application™ takes less than 3 minutes to complete. Once you’re done, one of our Loan Specialists will get in touch with you. You’re free to back out of the process if you want to, but should you decide to keep going, our experienced and knowledgeable Loan
Specialists will help you choose the right vacation home loan for your needs. We aim for 100% customer satisfaction, whether for second home loans or anything else.
Fill out the application today and get started on the path toward second home financing!
Documents Needed For All Loans:
- A copy of your current Drivers License and Social Security Card
- Most recent 30 days worth of pay stubs
- Most recent 60 days worth of bank statements. (If using retirement funds, please provide terms and conditions of withdrawal)
- Most recent 2 years W-2’s (please provide signed and dated Year-To-Date Profit and Loss statements if self-employed)
- Most recent 2 years IRS tax returns (both personal and business, all pages, all schedules please)
Additional Documents if Purchasing a Home:
- Copy of the fully executed purchase contract (signed by all parties)
- A copy of the cleared earnest money check or money order
- Copy of your option money check
- Homeowner’s Insurance Company contact information
Ask away. We love questions!
Frequently Asked Questions
A Loan Specialist is here to help:
- 713-ASK-ZEUS answers@zeuslending.com
- We’re available Mon-Fri 8 a.m.–7 p.m.
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If you’re in the neighborhood,
drop by our World Headquarters: 3104 Edloe Street, Suite 210
Houston, TX 77027