Second-home buyers face tighter loan marketFebruary 18, 2013 @ 9:17 am
Qualifying for a loan isn't easy for most borrowers nowadays but it's particularly difficult for vacation-homebuyers who are finding tougher underwriting requirements and other obstacles.
"Many popular vacation-home destinations are in the same markets where property values tanked during the housing downturn and have yet to stabilize," MarketWatch reports. "Some lenders say they're concerned about underwriting mortgages in areas where prices could fall further . . ."
Lenders are also being strict with vacation-home buyers, passing on higher mortgage rates - perhaps a quarter of a percentage point higher - especially if the owner plans on renting out the home. Also, lenders may require larger down payments than they would on a primary residence. In some cases, that can range from 30 percent to 60 percent.
But with prices in many markets still at affordable levels and mortgage rates so low, buyer demand is up for vacation properties. More buyers are bringing cash to the deal to avoid mortgage obstacles.
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