Homeowners pay mortgage payments on houses for a variety of reasons. Many homeowners own holiday homes or homes in places they visit frequently. Other people invest in real estate and rental properties. Lenders see investment properties and homes differently from main residences. Lenders understand that if a homeowner has to lose a house to foreclosure, it’s likely she will lose the second home or investment property before the principal residence. Because of this, mortgage lenders might have guidelines for second homes or investment properties .
Determine your financial plan to buy the second house. Decide just how much the down payment needs to be and just how much a monthly payment you are able to afford. Be sure to include the property taxes, the danger insurance and the association dues in calculating the maximum monthly payment. Contact the mortgage lender and apply to the mortgage.
Request a pre-approval, not only a pre-qualification. Pre-approvals receive a “Yes, if the loan meets those guidelines” approval by the bank. Pre-qualification is simply an opinion from the lender's loan officer of exactly what loan conditions he believes the lender will accept. The lending institution will require the new payment plus the present credit obligations not exceed 38 percent to 45 percent of your gross monthly income (before taxes and deductions). The pre-approval should say the maximum purchase price and loan amount to your new residence.
Provide the pre-approval letter into your realtor. Make sure that each of the prospective houses meet this budget. The loan dangers being diminished if the new residence ’s cost exceeds the pre-approved quantity. Find the right house for the situation and make an offer on the house. Negotiate with all the sellers until both sides agree on a price.
Ensure that your lender and realtor have every other’s contact info. The actual estate agent will offer the sales contract and other documents to the creditor. Coordinate with the creditor and real estate representative to meet all prerequisites for the loan approval. Get the final loan approval and close on the new residence.