To get a vacation home mortgage is tougher

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Why do people say that it is stiffer to get a vacation home loan?

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Hi Paula,

Though many lenders offer vacation home loans but getting the loan can be hazardous sometimes compared to conventional home loans.

It can be much harder and expensive to get a vacation home. The loan requires higher down payment and a good amount of asst to qualify than ordinary mortgage.

This is because, lenders consider this loan much riskier compared to primary home loans.

Regards,
James Hogg

Samantha · Posted: Mon Nov 07, 2005 2:40 pm Post subject:

Hi Paula,

What you have heard is true to a large extent. It is unfortunate that buyers face more hazards in case of vacation home loans although it has a booming market.

The main reason behind is that lenders consider this as riskier as rightly stated by James. Generally lenders put this logic behind, that since it is tougher to manage two loans, so people will tend to repay the primary mortgage in case of difficulty.

As a result people looking for loans on vacation homes need to have a better credit score than required in a primary mortgage and more assets or bank reserve. The loan requires larger down payment and renting out the house will demand higher interest rates.

Hope this information is going to help you. Know more about mortgage interest deduction on vacation home from the section on tax deductibility on vacation home and Reduced mortgage interest deduction

God bless you.

For MortgageFit,
Samantha

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While I live outside U.S., can I show my vacation home over there as my principal residence?

Samantha · Posted: Mon Nov 07, 2005 3:26 pm Post subject:

Hi,

I am very sorry to say that you can not treat your vacation home as your primary residence. Your primary residence is the home where you live.

If you want to qualify you need to clear the ownership and use tests which require you to own and use your home as your principal residence for 2 of the 5 years prior to its sale. Some times a partial exclusion is also available.

If you clear this ownership and use tests then it is not going to whether you current live outside U.S.

Hope you got the information.

God bless you.

For MortgageFit,
Samantha

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Hi all,

Thanks for the information. This forum is indeed rich with valuable discussions on mortgage.

Regards,
Paula

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