Buying A Second Home That Will Be Your Primary Residence

The buyers market can make it difficult for people to sell their first homes.

Buying a second home that will be your primary residence. Generally home buyers can qualify for better mortgage rates when borrowing money to buy their primary residence since mortgage lenders are assuming less risk than when they finance a second. Regardless of which type of home equity financing you employ your new debt will place your primary residence at risk if you end up defaulting on the loan which puts you in a position of double jeopardy of losing both your primary and second homes. In a nutshell this means you already have another home you live in full time or most of the year along with this secondary property which is often referred to as a vacation property.

Then we have the second home which as the name implies is secondary to your primary residence. There are options for those who want to purchase a new home to live in and rent out their current home. Unlike a pre qualification a pre approval spells out exactly how much you can borrow so you re not shopping for homes out of your price range.

Second home loans generally require more down payment and a better. Before you start shopping for a second property the one that will be your new primary residence be sure you get an upfront and underwritten pre approval from a lender. If you scored a sweet deal on a mortgage for your primary residence don t expect lenders to give you the same offer twice.

Although buying a principal residence has more low to no down payment options such as va fha usda or conventional options second home loan options are more vanilla but just because there are not as many options on a second home purchase it doesn t mean a lower down payment is not available. In today s real estate market some people are buying a second home to use as a primary residence. The financial hurdle you will have to leap is qualifying for a second mortgage.

As such home equity loans may be a better option if the down payment on your second home exceeds 30 of the available credit line on your heloc. Low housing prices low interest rates and tax incentives all have some homeowners jumping in for another home. The purchase may be a place to escape for the weekend a place to spend vacations or a place to consider renting to others as a money maker.