Compare Mortgage Quotes

s116133 · Joined: 14 Aug 2009 Posts: 1 1.82 Dollars($)

My girlfriend with whom I live owns the home in which we live. I am not on the deed. She paid off her mortgage 7 years ago. We have no debt and great income. We want to buy a second home with 50% down. The payment on a 15 year is less than 10% of our monthly take home.

The problem is that our loan broker said that we have to pay over 2 points and slightly higher interest because it is a second home. She said we might even have to pretend it is an investment home as it is only 50 miles away from our current home.

The current home is in an urban neighborhood and the 2nd home is in a foothill gated golf community. with much lower density, crime etc.

are these points reasonable?

Also, if I take out the loan as a second home, can I then change my residence and take advantage of the $8000 federal tax credit?

Thanks FF

savior70 · Posted: Fri Aug 14, 2009 6:48 am Post subject:

Hi,

Loans on second homes carry a rate of interest higher than those on primary residence. But since you are paying 50% of the purchase price in down payment, you are likely to get low interest rate on your loan. If you can afford to pay a few discount points upfront, the rates can go even further down.

As far as the tax credit is concerned, your girlfriend will not be able to claim it. Anyone who has owned a primary property in the past 3 years does not qualify for the tax credit. However, since your name is not on the deed to the current home, you may qualify. However, your name will have to be on the title to the new property and on the loan.

gmakerley · Posted: Fri Aug 14, 2009 8:24 am Post subject:

second homes are usually priced identically to primary homes. the one exception to that rule, as i know it, is for higher ltv loans (85% and up), which might cost a little bit more (not much).

your broker isn't being real with you. two points as well as a higher rate is ridiculous - don't believe that. furthermore, you have stated a case for it being a new primary residence, in that you're moving from a "lesser" community to a nicer one. that not only makes sense to this lender, it would qualify you for a primary residence purchase on the newer home.

your last question - about the tax credit - presupposes this second home foolishness. i don't want to answer it in that situation. you would be well-advised to ask the irs directly, or a trusted (qualified) tax advisor.

Guest

What are some reasons that I can use to qualifty for a second home mortage?

jveenstra · Posted: Thu Oct 08, 2009 2:19 pm Post subject: Second Home

A second/vacation home 50 miles away is fine. Usually, a second home regardless of distance from the primary home, must be in a resort or vacation type area. A gated golf community should be ok for that criteria.

The $8,000 tax credit for first time buyers expires November 30, 2009. It is for primary residence only, not second home. The government is discussing right now whether or not to extend the time that is good for.

As George notes, the rates/points for second homes should be the same as for primary homes. That would be true for Fannie Mae and Freddie Mac mortgages. We have no idea if you are looking at a jumbo mortgage or whatever which could be different from Fannie Mae and Freddie Mac guidelines.

Your credit scores need to be 640 or higher to get the best rates. If your middle credit score is below 640, that might account for some difference in rate and points. That would be the case for down payments of 40% or more.

The mortgage person may be charging points if the mortgage is very small.
Your girlfriend is not eligible for the tax credit because she owns a home. You are eligible if you close on or before November 30, 2009 as long as it is your primary home and your income is below $75,000 per year and you are not married to her when you do it.

If you have the income, perhaps buy it as your--you alone--primary residence now. Add her to title later if desired or necessary.

Company	Loan Type	APR	Est. Pmt.
				Go
				Go
				Go
				Go
				Go
				Go

Property State:
Property Type:
Credit Rating:

All times are GMT - 7 Hours

Page 1 of 1

Compare Mortgage Quotes

Buying a second home to be a primary residence