Many people plan to buy additional home for their luxurious life or for investment purpose, like vacation home or for rent purpose. Most buyers pay in cash for second homes while some loan a mortgage amount for it. However, people still wonder if it is possible to get mortgage for another house. Well, it is possible, but there are few things to keep in mind.
When buying second home you need to be calculative, especially, if you already owe a mortgage loan for your primary home. There is home equity loan which is similar to home mortgage loan. This can also be taken as an extension to mortgage loan for your primary house. Since you are purchasing another house, this means you have already gone through all the formalities during the first purchase. Thus, you know what all investment and expenses are involved in it. To remind you back we have mentioned some of them below –
- First time down payment of the purchase amount which is a small part of the total value and the rest amount can be loaned.
- Final costs that involve registration and signing contracts.
- Monthly installments including interest rates for the mortgage amount.
- Property tax as well as insurance.
- Utilities like electricity, gas, water supply, maintenance, etc.
- Private mortgage insurance premium.
Another important factor to be considered is the type of financial institution from where you will be taking loan. Different institutes have different interest rate and fees. Sammamish Mortgage has low fees and provides affordable interest rates on loan amount. They have been in this business for 28 years since 1992. They are not just any common financial institution who is concerned about only money, but they also build a personal relationship with their customers to gain their trust and confidence.
As per every financial institution, there is a difference between primary and secondary home mortgage –
Primary House loan
The mortgage for the primary home depends upon the credit score majorly. You need to keep at least 620 credit score to get primary loan. In this loan, you require to pay at least 3.5 percent down payment.
Second House loan
However, in second home, you will require to pay 10 to 30 percent of down payment. So, the buyer needs to check their account to see if they are ready to pay such an amount immediately. Lenders will also check your bank account for verification and your credit score should be 640 to 700 to qualify.
There are other alternatives as well to get mortgage for second home –
- Pay cash for the entire amount to save yourself from mortgage and installments. This may restrict you to use that money for other purpose, but at least in one go, the house will be yours.
- You can add a joint member in the mortgage plan. This makes the loan procedure simpler and the responsibility can be shared.
Any property is an asset and therefore while buying you should also think about its market value in near future. If the price will depreciate, then change area and look for better option.
If you’re short of cash for down payment or you feel that installments can become difficult in few months, then don’t think of buying it. Unless you have strong support from family to share responsibility or good amount of money in your bank account, it is wise to stay low level.