How to Finance Your Jersey Shore Vacation Home

    ferzoco 10-7-15If you are looking to purchase a vacation home on the Jersey Shore you will need to start looking into your financing options early in the process.  It is no secret that mortgage lenders have tighter standards when it comes to lending for a second home or a vacation home.  They tend to be more cautious with lending for a second home because they feel that your monthly budget is being stretched thinner, and you become more of a lending risk. In return, being an increased risk often times leads to mortgage rates that are slightly higher than average.

    Mortgage Rates      

    Mortgage lenders are typically looking for a second home buyer that has a higher net worth than the average single home buyer. Interest rates are still near historic lows and are favorable when it comes to buying a second home.

    Home-Equity Line of Credit

    Do not be surprised if your mortgage lender suggests that you take out a home-equity line of credit on your current residence to help fund some or all of your future Jersey Shore vacation home.  This may be an option to consider with interest rates so low. However, you first must consider that home-equity lines of credit usually come at a higher rate than the prime rate, and in the end you could end up paying more in interest than if you had taken out a traditional mortgage loan.

    Rental Income

    If renting out your vacation home during the period of time you are not there is in your plans it may be difficult to prove to your lender the revenue potential it holds.  Lenders tend to be hesitant when loaning on properties in the secondary market, and some will not even offer these types of loans at all.  Be prepared to show your potential lender proof of a decent cash flow from the property’s recent rental history.

    Loan Terms

    Securing the best mortgage rate is important, but also consider the term of the loan as well. When securing a loan, you want to have the right to prepay all or part of the loan without receiving a penalty.

    Agent Advice

    An experienced Realtor that is familiar with the area will also be familiar with local lenders who may be willing to work with you when it comes to flexible financing and securing the most affordable rate.

    The Ferzoco Group is experienced in working with buyers and sellers from Ocean City to Cape May. If you are looking to sell or buy a home let us know how we can help.  Our job is to make your tomorrow better than today. Contact us today via email or give us a call at 609-264-6762.

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