Shopping for a vacation home can be exciting, but finding the right financing option can seem intimidating. With PHH Mortgage, it doesn't have to be.
We’ll help you understand the vacation home buying process, help you find a financing option that fits your particular situation and answer your questions every step of the way. It all starts with a call to (800) 451-1895.
This overview walks through what’s involved in buying a vacation home, so you’ll have a good sense of what’s to come before you jump in.
This is an important first step in the decision process. Key costs to consider are:
Talk to one of our loan consultants who will help you find the financing option that fits your particular situation. Call (800) 451-1895.
Take a few minutes to call us for a loan pre-approval decision before you start looking for properties. Knowing the amount you can borrow can help you feel more confident going into your search.
If you do receive a loan pre-approval decision, the process will result in a letter that you can take to your real estate agent to facilitate the buying process. In fact, most real estate agents will ask you to have a pre-approval letter in hand with the loan amount indicated before they show you homes.
When purchasing a vacation home, it’s important to consider the impact of financing the purchase. If you are still financing your primary home, you must be prepared to simultaneously have and manage two mortgages. Remember that the vacation home will differ – loans for vacation homes typically require a larger down payment and are subject to higher interest rates than loans for a primary residence.
Evaluation criteria for a vacation home include your debt-to-income and housing-to-income ratios. Your debt-to-income ratio is based on your total monthly debt payments, including your mortgage payments on a primary residence, and how much you earn. It’s important to know your debt-to-income ratio going in, as it is expected to be below 36% to obtain a second home. The housing-to-income ratio reflects the total amount you spend each month on housing, including mortgage payments on a primary residence.
Once you find the vacation home you want, your real estate agent can provide you with a list of comparable homes (known as “comps”) recently sold in the area. Comps help you determine the right price to offer. As with the purchase of a primary residence, there are important factors to consider, such as the condition of the vacation home, the cost of any necessary repairs, the competitiveness of the market in that area and more.
Vacation property decisions also carry other considerations, including access, the surrounding tourism region and rental income potential. Search for properties online to get an idea of the homes available in your price range.
Remember: any offer you make could become legally binding, so we strongly recommend carefully thinking through the details and consulting with your real estate agent.
As with a primary residence, your offer for a vacation home should contain provisions for a home inspection by an accredited home inspector and an outline of actions to be taken if problems arise. The inspection should cover interior and exterior structural elements as well as heating/cooling, electrical and plumbing systems. Even if an out-of-town trip is involved, it's a good idea to be present during the inspection so you can ask questions about the property.
The loan commitment takes place once we approve the loan and receive an acceptable appraisal and title search that meet our guidelines.
You’ve done your research, asked informed questions and evaluated your options – and you’ve found a vacation home and financing option that work for you. Now it’s time to close the deal.
At the closing, you and the seller transfer funds and sign all applicable paperwork to finalize the transaction. Real estate agents, closing agents, attorneys, and mortgage and title representatives may also be present. Our loan consultant will help you prepare for closing, including providing you with an estimate of any closing fees.
Once the papers are signed and fees are paid, you'll get the keys to your new vacation home.
Obtaining financing is a critical step in the vacation home buying process. The purchase of a vacation home often requires higher credit scores and more documentation than for a primary residence – especially in the current market.
PHH Mortgage can help you navigate the details and requirements. Ready to get started? Call an experienced PHH Mortgage loan consultant at (800) 451-1895 or get started online.
1 This is not a commitment to lend. All pre-approval requests or applications are subject to complete underwriting review.