Second Home

Second Home

Today’s historically low interest rates make now the perfect time to purchase a second home or refinance one.

One of the most popular types of mortgages is the 30-year fixed-rate mortgage. This loan is usually the easiest to qualify for and provides the maximum interest deduction at tax time. The interest rate stays the same over the life of the loan which provides unchanging low monthly payments.

Over time, borrowers gain equity in the home as they pay down the principal or actual loan amount. For borrowers who intend on staying in the house for a long time this mortgage is particularly helpful and practical. A disadvantage of the 30-year fixed-rate mortgage is paying more interest over time than shorter period.

No matter what the economy looks like, mortgage rates change on a daily, even hourly, basis. Rate fluctuations can cost or save you thousands of dollars. With that in mind, the question when shopping for a loan is whether it's best to lock in a rate or float the loan. Either way, there's risk.

Second Home

It's your choice the rate-lock option means a borrower fixes the price at the current mortgage rates, provided he or she finalizes the loan within a specified period. The upside is that you are protected against a potential mortgage rate increase. But if the rate goes down, you could end up paying more than necessary. The "float" option, by contrast, allows the borrower to adopt a wait-and-see approach. The risk remains, though: If rates do rise, you wind up losing money.

Locking current mortgage rates is a good idea if rates are on an upward trend, so take time to understand the market when you're shopping for a home loan. If prices aren't fluctuating by much, or if they're moving downward, it would be better not to lock. Locks typically last for 30, 45, 60 days or more. The longer you lock, though, the more likely it is that you'll have to pay a fee for the privilege. Mortgage rates are low, encouraging home buyers and homeowners to look for new mortgages. Some mortgage borrowers are opting for a shorter mortgage term of 15 years because the monthly payments are more affordable because of today's low mortgage rate.

Second Home

Not everyone can take advantage of the opportunity to refinance or qualify for a new home loan due to today’s tightened credit guidelines.

To be approved at the lowest mortgage rates, borrowers do not need to have the highest credit score. In addition, the consumers need a reasonable debt-to-income ratio. Most lenders will qualify borrowers at a maximum of 50 percent of overall debt to household gross monthly income. Some borrowers with significant assets or income will be able to qualify even with slightly lower credit scores or higher debt.

Low mortgage rates result in lower monthly payments which can save you thousands of dollars off the life of the loan.

What documentation will I need?

• Personal tax returns for the past 2 years with W2's
• Current pay stubs for the past month
• Bank statements for last 2 months (all pages)
• Latest retirement statement for each active account (all pages
• Sales contract (purchase)
• Clear copy of Driver’s License (front and back)
• Clear copy of SS card (front and back)
• Addresses and loan information of other real estate owned (if any)

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