Your Guide to Purchasing a Vacation Home
Have you considered buying a second home or a vacation home? Whether you’re looking in Western North Carolina or elsewhere, it’s helpful to understand some of the considerations you’ll need to make in the process. Getting a mortgage for a second home isn’t the same process as what you experienced when you bought your primary residence, so here’s what you need to know.
Vacation Home vs. Investment Property
So what is the difference between a vacation home and an investment property? The most significant difference is whether you manage that property alone or hire a third party. In most cases, the owner will use a vacation home at various times throughout the year. While you can generate income, hiring someone to manage the property turns it into an investment rather than a second home.
Popular Areas for Buying a Vacation Home
Unsurprisingly, Asheville, North Carolina, is still one of the best places to buy a vacation home. The area is growing fast, and the natural beauty of the mountains draws people from all over the country. Asheville itself doubles its population every weekend.
Other places throughout North Carolina also make great spots for vacation homes, including several options in the WNC area.
How to Determine Your Budget
Buying a second home isn’t the same experience as determining your budget. Understanding your finances in terms of loans and cash reserves is essential. Options can include a home equity loan or a conventional loan. And as always, we recommend you talk with an independent mortgage lender before you buy.
Finding a Local Mortgage Lender
Most often, your second home is going to be located in a place outside of where you live full-time. You will always want to reach out to a local lender. GoPrime Mortgage is licensed in several states, including North Carolina, California, Georgia, and Colorado. A local lender can work with you on the requirements in that state to ensure your closing goes smoothly.
Everything You Need to Know About Buying a Vacation Home
Independent mortgage lenders can be creative when discovering the best loan for you. Some requirements depend on the loan you get. Freddie Mac defines a second home as one that the borrower occupies for some portion of the year, a single-unit dwelling suitable for year-round occupancy, and not subject to any agreements that give a management firm control over property occupancy. These are what differentiate a vacation home from an investment property.
The requirements for buying your vacation home are:
- Debt-to-Income Ration needs to be about 43%
- The credit score needs to be at least 640
- 10% down payment
- Reserves equal to two to six monthly mortgage payments
Call, Click, or Come In!
GoPrime Mortgage in Ashville, NC, is here to help our neighbors find their road home. Talk with Zachery Adam and his team of independent lenders to start the process of getting pre-approved. Learn more at GoPrimeNC.com and contact us today.
Click here to talk to a first-time home buyer mortgage lender. Learn about an FHA loan in NC, loans for vacation homes, or a second home mortgage loan.
