If you are thinking of looking for a second home whether it is for a vacation get away, rental property, or a place for one of your kids you will need to know how to get a mortgage for a second home. You need to know if you can afford the second loan for another property and if you have the qualifications that a lender requires for another loan. The instructions are easy and you’ll need the qualifications for a second loan, a second house that you want to buy and the income to make the purchase and the payments.
Step 1: You need several things to qualify for a second property loan. You need a credit score that is good, you need cash for a down payment, and you have to have the proof of your ability to pay for the secondary property loan. If you don’t have these three things you may not qualify or if you do qualify you may not qualify for a good rate of interest.
Step 2: Why do you want to buy a another piece of property? It is an investment but it is also a liability in that you will need to have money for repairs and improvements. If you are buying the house for investment and you buy low and sell high you will benefit.
Step 3: What are your finances like? Do you have a budget and do you stick to your budget? If you have good financial management and you make enough to afford the mortgage follow the steps to learn how to get a mortgage for your second home. If you have a budget with enough discretionary income to make the secondary payment you will benefit.
Step 4: Look for the best interest rates. The rates of interest have continued to fall since the inception of the housing crisis. It is a buyers market if you have the money to invest. You will have to have your documents in order and you will have to meet the requirements of the lender to get a mortgage for your second home.
Step 5: Start with the lender of your first house loan. You may find that they want to keep your business and they will offer you an incentive to borrow from them again. You will have to have a good repayment history on your loan and the income qualifications for the note. With a good credit score and good credit history with your current loan holder you may be exempt from paying insurance and taxes into escrow.
Step 6: Locate the property that you want to buy and be sure that it will meet your needs for investment, for a vacation property, or for your child.
Step 7: If you are buying property for an investment and you plan to rent it out you probably will not be as interested in spending a lot of money for renovations as you would if you were buying the home for your child or for yourself. If you are buying for an investment and plan on selling the house you will not want to put as much down on the property as you would if you planned on vacationing in the house and keeping it for an extended period of time.
Step 8: If you are purchasing for an extended period of time make sure that you can afford the payment for that length of time. You need to be secure in your job and be certain that you have the income to make the payment. You will also need extra money for repairs and any improvements that are needed.
Step 9: You can go to a website called Bankrate.com to compare rates and to insure that you have the best possible rate. If you are not sure how to get a mortgage for a second home after you have completed the above steps you will need to wait until you have discussed your options with a financial advisor.