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With interest rates remaining at historic lows, now may be a good time to purchase a second home for your family’s weekend getaways. Whether it’s a lake home or mountain cabin, here are four things you should know about buying a vacation home.
1. Down Payment of 10%
“It’s a common misconception that buyers believe they need as least 20 percent for a down payment on a second home,” said Paula Brown, SVP of Freedom First Mortgage. “Actually, only 10 percent is needed for a down payment.” While many buyers have saved for their down payment, those who have not will frequently use their primary home’s equity. Take advantage of the low interest rates on home equity loans and leverage this resource for your second home.
2. Low Interest Rates
Interest rates for vacation homes are comparable to those for primary residences. “I frequently hear from prospective buyers that they expect interest rates to be higher for a vacation home,” stated Vanessa Moore, a Mortgage Lending Officer with Freedom First. “While there are multiple factors that contribute to the interest rate a buyer qualifies for, many vacation home buyers I work with are getting the same, or nearly the same, rate they would get for their primary home. “
3. Get Prequalified
Just as when you purchase a primary home, it is important to work with a mortgage lender and get prequalified. Adam Johnston, a Mortgage Lending Officer who recently joined Freedom First after working for a number of years with a focus on the Smith Mountain Lake market, suggested buyers meet with a lender early in the process of buying a second home.
“The lender can give you a firm idea of how much house you can afford,” stated Johnston. “Also, the prequalification can set you up to make a stronger offer.”
4. Work with a Local Realtor
Many buyers believe it may be easier and could potentially save them money to work with the property listing agent. Tessa Rider, a Mortgage Lending Officer and selected by the Roanoke Valley Association of Realtors as the 2014 Affiliate Member of the Year, recommends that vacation home buyers select their own real estate agent. “A buyer’s agent will be your champion in the home buying process, representing your interests in contract negotiations,” explained Rider.
When you are ready to start on the path to buying your vacation home, Freedom First is ready to help with our experienced team of mortgage professionals. As the Roanoke Valley Association of Realtors’ 2015 Affiliate of the Year, Freedom First can work with you on a prequalification and recommend real estate agents who are knowledgeable in helping people like you buy the vacation home of their dreams.