Have you recently been thinking about buying a vacation home? Here in Asheville, North Carolina, our vacation home industry is incredible. Here in the mountains of Western North Carolina, you have options of both snowy escapes or trips to the beach, and we want to help people invest responsibly in the area. Read on for what to consider when looking into buying a vacation home here, or wherever you feel called.
How Will You Use Your Vacation Home?
Many people invest in a vacation home for one of two reasons:
- Short term rentals
- Personal get-aways
How you intend to use your second home should help to narrow down the kind of house you buy and where. Before you begin the search for a second home, think about your intentions and how that will apply to your life.
Determine Your Homebuying Budget
Purchasing a second home won’t be the same process as buying your primary residence. It’s important to look closely at what’s available for you financially in terms of loans and your cash reserves. There are a few options to consider, including a home equity loan or a conventional loan. We always recommend that you talk with an independent mortgage lender before determining if you’re ready to make an offer.
Find a Local Mortgage Lender
Since your vacation home is likely outside your hometown, you’ll want to reach out to a local lender who is familiar with the area. You can work with GoPrime Mortgage 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.
Vacation Home Loan Requirements
An independent mortgage lender can get creative when working with you to find the right financing option for you. However, some requirements depend on the loan you get. The Freddie Mac definition of a second home is 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 include the following:
- Debt-to-Income Ratio 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
Find a Local Real Estate Agent
Once you’ve created a financial plan for buying your vacation home, next, you want to find your dream property. Since you probably don’t live in the same area as your new purchase, opt to work with a local real estate agent who can be on top of new listings as they come up. While there is still a lot of competition in the marketplace, getting a pre-approval can help you move the process along quickly once you settle on a home. Your agent should be familiar with out-of-town buyers to bring you information quickly and negotiate on your behalf.
Do you want to know more about buying a vacation home? Contact the team at GoPrime Mortgage in West Asheville.