Thoughts On Buying A Second Home
One of the best decisions my wife Pam and I ever made was purchasing our little Lake Michigan getaway. About fifteen years ago Pam, my mother-in-law, and father-in-law came to me with a proposal about buying a second home. They found a property on Lake Michigan with its own private beach that was a divorce sale and we could buy it under market. My first reaction was absolutely not. We had a very comfortable first home and I didn’t want to take on the additional monthly expense. They were relentless. They finally wore me down, we put in a contract and it was accepted.
Financing Options In Buying A Second Home
Since FHA does not offer a vacation home option we had to look at a conventional loan. The minimum down payment Fannie May allows for a vacation home is 10%. We both put down 10% and eliminated the mortgage insurance.
We decided to split the payment down the middle and each takes half of the interest deduction on our income taxes. Having a construction background I would be responsible for any updates (kitchens, baths, flooring, etc.) and they would take care of the general maintenance (lawn and yard work, snow removal, etc). Those lines have since become blurred and we all just pitch in to keep the place nice.
Distance In Buying A Second Home
Being in Michigan and only two hours away we use it all year. We invite family and friends up all year round. In the summer we enjoy the beach and in the winter there’s downhill and cross country skiing. Some of the best family memories we have were made there. The kids are fifteen and eleven. They don’t remember a time when we couldn’t just take off for a weekend and spend time together as a family.
Every year I invite my buddies up for several weekends of beer and the sport du jour. It’s great to get together with old friends that you rarely see except on these short weekend trips. Pam invites her friends up for wine tasting, blueberry, apple, and peach picking, shopping, and hitting the night spots.
While the monthly expense is still not on my top ten list, if I had it to do all over again, I’d do it without hesitation. The tradeoff in wonderful memories and fun times with family and friends has been more than worth it.
Affordability In Buying A Second Home
Lastly, make sure you can comfortably afford it. Don’t buy too much. Keep your payment where it can fit easily into your monthly budget. Sitting on your beautiful beach at your beautiful beach home wondering how you’re going to make the house payment will make owning a second home fun for everyone but you. There are expenses associated with buying a second home and keeping a second home such as monthly housing payments, maintenance, and general upkeep but the rewards and pride of owning a second home overrides the rewards of being a second home owner.
Requirements To Qualify For Second Home Financing
Buying a second home can be extremely rewarding. Second Home Financing are conventional loan programs. FHA Loans, VA Loans, and USDA Loans only allow for primary owner occupied homes only. Conventional loans have second home financing and investment home financing programs available. 10% down payment is required for second home mortgage loans and a minimum credit score of 620 FICO is required. Maximum debt to income ratios permitted is 45% which includes the borrower’s primary home and the proposed second home mortgage loan.
This Article Was Written By Bob Vogel NMLS 1446953
Bob Vogel Is A Mortgage Loan Originator For The Money Store NMLS 1191430 Orland Park, Illinois Branch Office Under The Gustan Cho Team