Unlocking the Secrets of Buying Your Second Home!

Hello, dear readers! If the idea of purchasing a second home is dancing in your mind, you’re in the right place. As your trusted mortgage broker, I’m here to guide you every step of the way. So, before you embark on this exciting journey, let’s ensure you’re well-equipped with all the necessary information.

Remember, the information on this post is meant to be a general guide for specific requirements when purchasing a second home. These requirements can change over time, depending on the guidelines set by various entities. Also keep in mind that these guidelines are to be met in addition to the typical underwriting process that includes income/asset verification, debt calculation, etc.

Defining a Second Home
Firstly, it’s crucial to understand what a second home truly is. A second home isn’t just any property you purchase after your primary residence. It’s specifically a property that:

1. Can’t be used as a rental or timeshare.
2. Needs to be occupied by the title holder for a part of the year.
3. Is a single-unit property (no multi-plexes allowed).
4. Grants exclusive control over the property to the title holder.
5. Remains as a personal property, not a rental or timeshare, post-closing.

If you’re thinking of renting out the place, that shifts gears towards investment property territory, which has its own set of rules. An investment property can be a very smart move, check out my post for more information.

Navigating Conventional Loan Requirements
Most second homes don’t qualify for the benefits that can come with buying your first home, like down payment assistance or reduced down payment options. Expect to have at least 10% for a down payment. Additionally, you’d typically need to keep some reserves (between 2-6 months of expenses) for every property you own.

A quick note: If your dream second home happens to be somewhere less accessible during certain times of the year (like a cabin deep in the woods with roads closed during winter), you’ll need to be approved by Fannie Mae. Freddie Mac does not allow homes that are only partially accessible. If that sounds like word salad, don’t worry. When I get you your pre-approval, I’ll let you know if your home has to be accessible during the entire year.

Diving into VA & FHA Loans
For VA loans, you’ll need to keep two key requirements in mind:

1. You must have eligibility on your COE, even if it’s just a dollar.
2. The new property you’re eyeing MUST become your primary residence. While you can retain your existing VA-financed property, your newly purchased one needs to take the crown as the main residence.

As for FHA loans, they’re generally not in the game for second homes.

Lastly, if you’ve previously benefited from first-time homebuyer programs or DPA, the guidelines might shift a bit. However, the specifics can vary. Given my expertise as a mortgage broker, I’m always available to discuss and clarify how these programs might impact your second-home buying journey.

Purchasing a second home is more than just another real estate transaction; it’s an adventure filled with possibilities. With the right guidance and understanding, this can be a smooth and rewarding experience. Remember, as your dedicated mortgage broker, I’m here to offer my expertise and services to ensure you secure your dream second home. Reach out, and let’s turn that dream into reality!