Friday, November 30, 2018

The Best Loan Type for Second Homes

The Lake of the Ozarks is an incredible place to live for both full time and vacationers alike. It is no surprise that after a few vacations in the area you may already be dreaming of owning a vacation home at the Lake of the Ozarks. Team Lasson makes it our goal to help you accomplish this by providing mortgages at the Lake of the Ozarks. If you already have a mortgage, here are a few things you can keep in mind as you make plans to take on a mortgage for your second home.

What Financing is Available for Vacation Homes?

There are two paths that will lead you to your vacation home. You can take out a conventional mortgage loan for the purchase of the new home or you can refinance your present mortgage or take out a home equity loan (aka home equity line of credit, HELOC) on your existing property. Here are a few important details about each of these loans types.

Conventional Loans

This process will be similar to paying a mortgage for a primary residence. You will have to put down an initial down payment, and from there set up a payment plan over a span of 30 years. These loans also come with either a fixed or adjustable interest rate.

What makes this different than your mortgage on your primary residence? Second homes require a larger down payment. They are also suited to individuals who are stable in their career and lifestyle. You will need a good credit score, stable income, and a low debt-to-income ratio, and be able to show an ability-to-repay to meet the lending guidelines. Another difference is that you will need to prove that this new residence will be a vacation home and not an investment property.

Home Equity

Another option would be to borrow from your existing property equity, and there are a few ways to accomplish this. One of the more popular ways of doing this would be to take out a HELOC. A HELOC is a line of credit backed by the equity you have in your home. Your primary mortgage would stay the same, and the HELOC would count as a separate loan. These loans usually carry variable interest rates and they require good credit scores.

A Home Equity Loan or Second Mortgage is another popular option. They are also backed by the equity you have in your home. This provides you with your funds in a lump sum, rather than a line of credit that you draw from and pay off repeatedly. These loans typically have fixed interest rates.

Another option would be to refinance your primary home to pay off the existing mortgage and take additional funds out of the equity to use to purchase the new property.

5 Things to Remember About a Vacation Home Loan

Here are 5 things that we briefly mentioned above, but that you will want to focus on while planning your vacation home loan at the Lake of the Ozarks.

  1. Good credit
  2. Ability to make a down payment
  3. Qualifying savings
  4. Low income-to-debt ratio
  5. Proof that the property will be a vacation home

Time to Finance Your Vacation Home

Team Lasson would be honored to assist you with purchasing your vacation home at the Lake of the Ozarks. From fishing cabins to million dollar mansions right on the Lake, our team is here to make the process as easy as possible. Visit our website to learn more about our mortgage services, or give us a call to get started. We love the Lake of the Ozarks, and cannot wait to help you love it as well.

For Lake area news, resources and tips on financial services, please 

Michael Lasson
Senior Loan Officer
NMLS #: 493712

4655 B Osage Beach Parkway
Osage Beach, MO 65065

Direct: (573) 746-7211

**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.


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