You’ve learned about the costs of buying a vacation home, now you need to decide how you’re going to pay for it and which route is best for you.
How is purchasing a second home different from purchasing a first home?
There are significant differences between purchasing a first and second home including:
- Larger down payment. A bigger down payment (sometimes 10%) is often required for purchasing a second home.
- Interest rate. Interest rates on second-home loans tend to be higher than those on primary residences.
- Qualifications. Lenders may have stricter eligibility requirements for income, credit scores, debt-to-income ratios and more for second home purchases.
What are my financing options for a second home?
Just like your first home purchase, you can finance your second home with a mortgage. You’ll choose a mortgage type, such as an adjustable-rate or fixed-rate mortgage, as well as the loan term, such as a 15- or 30-year loan. When you finance a mortgage with MSGCU you take advantage of marketing leading rates, our free homebuyers workshop, true preapproval, interest rate lock, and more. Plus, MSGCU has mortgage options in Michigan and Florida, so whether your second home is up north or way down south, you can count on us.
Connect with a friendly MSGCU mortgage consultant to get started and learn how you can save more than $600 on closing costs with our $99† mortgage processing offer when you apply by December 31.
You can also finance your second home using the equity of your first home by taking out a Home Equity Loan. A home equity loan is perfect for a home renovation, if you need to lower a payment with debt consolidation, and yes even a second home. We offer market-leading rates as low as 6.25% APR*, a hassle-free application, and we’re here to answer your questions and guide you through the process. Learn more.
Which additional factors do I need to consider when purchasing a vacation home?
Remember to consider these factors when purchasing a vacation home or second home:
1. Buying vs. building. Buying a ready-made home will allow you to move in or rent out the home sooner. Building may take longer, and will allow you to customize the home to your heart’s (or budget’s) content.
2. Land. If you decide to build, be sure to consider the cost of land when calculating the cost of your new home. You’ll also need to take local zoning laws into account as well as utility access for the property.
3. Storage for recreational equipment. Before signing on a property, make sure it has sufficient storage for recreational vehicles and equipment you may want to use at the home, like boats, jet skis, snowmobiles, kayaks and skis. Make sure to check with a neighborhood association or the local municipality to see if there are restrictions around the storage of these items on the property, too.
4. Amenity access. Check to see if the amenities you desire in a vacation home, like pools, beaches and nearby recreational activities, are accessible before you close.
With your new wealth of knowledge, you’re one step closer to owning your dream vacation home. Find a MSGCU mortgage consultant, call us at (866) 674-2848 or (586) 263-8800 and select option 2, or visit any branch office to get started!
†$99 mortgage processing fee offer available for mortgages loans originated and disclosed between 5/1/2024 and 12/31/2024 and saves $646 on mortgage processing when you obtain a mortgage from MSGCU. Homebuyers are responsible for any third-party closing costs including but not limited to home appraisal, home inspection, title, tax, and insurance. A loan amount of $200,000 at an interest rate of 7.000% and an Annual Percentage Rate (APR) of 7.039% has a payment of $1,330.60 with 0 points due at closing. The payment does not include property taxes or insurances, the actual payment will be higher. *Special Promotional Rate. Eligible on fixed rate home equity term loans applied for during the promotional period from 6/3/2024 through 12/31/2024. Subject to credit approval. Annual Percentage Rate (APR) may be higher, based on term of loan, credit score, collateral, and loan to value. Ask an MSGCU Representative for details.
Category: Finance
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