How to Get a Mortgage for a Second Home

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By cadence
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Getting two houses means getting a second mortgage.

Do you need to get a second mortgage for a second home? Maybe you want to purchase a home to sell for a profit, or you would like a summer home. Whatever the case, you need to get a second mortgage, and decide if that is a good option for you and your family. Remember, this is a big decision, and you need to be sure that you can afford this, and do this responsibly. Please note that I am referring to getting this mortgage for a second home, not a second mortgage on a home that you already own.

Difficulty: Easy

Instructions

Things You'll Need:

Money
A second home to purchase
The ability to get a second mortgage

Step 1

Be prepared with the necessities to get a second mortgage: a good credit score, money for a down payment, and proof of income. Without these, you are not likely to get good mortgage rates or get a mortgage at all.
Step 2

Decide why you want to buy a second home. When you get a second mortgage, you are making a big investment. Make sure that you can afford any improvements that are necessary for the home, and that you'll be able to sell the house at a profit if that is your goal.
Step 3

Analyze your finances. If you complete your budget and realize that you can get a second mortgage and still maintain your lifestyle, you're on your way to a successful new home.
Step 4

Wait for mortgage rates to come to a reasonable place. Do research among mortgage companies to see which company works best for your needs. To be approved for a mortgage, you will need proof of finances, proven income and a good credit score.
Step 5

If you are currently paying the mortgage on your first home, speak with a representative from the mortgage company that you are currently working with. If you have a good payment history on your first mortgage, you may be able to get a good deal on your second mortgage. You will also have more flexibility this way when it comes to escrow - you may be able to say that you do not want to escrow your homeowner's insurance or city taxes.
Step 6

Find a property that you would like to purchase. Make sure that you are absolutely sure about buying this property, because a second mortgage is a huge investment.
Step 7

Decide on what type of property that you would like to purchase. If it is a home to live in or visit, you may want to put more money down up front, then pay less monthly over an extended period of time, since this will be something that you will keep for a long time.
Step 8

If you are buying an investment property, choose a mortgage with as little money down as you can possible, since you will only be paying the mortgage until the property is sold. Make sure that you can afford the payments for an extended amount of time, though, in case the house does not sell. Also make sure that you can afford all repairs and upgrades.
Step 9

When you are about to sign a contract for the new home, visit a site like Bankrate.com to compare current mortgage rates and make sure that they are in your favor. Choose a reputable lawyer and mortgage company and move forward with your purchase. If you have any doubts, do not buy the property, because it is too big of an investment to make if you are unsure of it.

Comments

Inkling said

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on 12/27/2008 A lot to think about. Thanks for sharing some important information.

Kallicat said

on 12/26/2008 Very good information; however, the title was a bit misleading for me. I was thinking it was going to be about taking out a second mortgage on an existing home, not purchasing another property. Step number 7 is very wise. Hadn't thought about putting as little down as possible. Thank you for the information.