Some Tips on Financing Your Lakefront Home
Given the challenges many people face when applying for a home mortgage loan today, it's more important than ever to do business with both a real estate professional who is familiar with the ins and outs of lake home purchases, and an experienced lender who can guide you through the financing end of things.
Real estate agents who are experienced in waterfront home sales will be versed in local and state rules and regulations that pertain specifically to waterfront homes, and can recommend a lender who will be familiar with the lending guidelines and potential challenges related to financing this type of property. Here are a few quick tips. 1. Find a real estate agent who is familiar with the specific lake or region you are targeting. 2. Choose a property that fits your lifestyle. 3. Buy the location - the home can always be changed. 4. We all love surprises, but finding out that your new home will require flood insurance is not a welcome surprise. 5. Get pre-qualified BEFORE you find your new home. Not only will this help to streamline the process once you do find the perfect home, but a pre-qualification letter will show the prospective sellers that you are qualified, and potentially strengthen your position during negotiations.
Lakefront home financing can be very simple or over the top complicated. With today's new financing rules in place just expect complicated.
A quick outline of what you can expect to find when you are searching for that perfect loan.
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Comparable Sales - Is there anything unique about the home that would make it hard for your lender to find similar homes to compare it to when determining market value? A "quirky" or otherwise uncommon characteristic (such as lake water as the source for drinking ) may be acceptable if the appraiser can demonstrate that it is common to the area, and does not negatively impact marketability. A loan approval is essentially made up of two parts - the credit approval and the property approval ( appraisal ). Regardless of down payment, credit history, assets, etc. ultimately, the security for a mortgage is the property itself. So, the property must also be acceptable to the lender, being "marketable" is one criteria that must be met.
Seasonal - If the property is a seasonal home, check with your lender to determine what types of financing options are available. Certain seasonal characteristics may be acceptable for conventional financing, while others may not.
Access - If it is an island or seasonal home with an un-plowed road, be sure the appraiser can access the property to perform the appraisal for the lender. Also note, the appraiser must verify that all systems are functioning (water turned on, not winterized, etc) at the time of the appraisal.
Portfolio vs. Conventional - To be eligible for conventional financing, your credit as well as the property's profiles must comply with certain guidelines as set by Freddie Mac or Fannie Mae. These guidelines and are considered industry standard, and tend to vary only slightly from lender to lender. On the other hand, guidelines for "Portfolio Loans" are set by individual lenders. Consequently, the rate, down payment requirement, and credit parameters can vary. If the property is not eligible for conventional financing, that doesn't mean the end of the road. A portfolio loan is often a very attractive option. Also note, if the property is not eligible for conventional financing, it will also most likely not meet the requirements for PMI, which means a minimum of 20% down would be required.
Jennifer McCall Branch Sales Manager Licensed Loan Originator NMLS #408711 MA Lender License #MC2561 Branch NMLS ID#987785 Licensed by the New Hampshire Banking Department Merrimack Mortgage Company, LLC 92 Main Street Meredith, NH 03253 603-279-7903 Tel 603-520-1269 Cell 855-682-0150 Fax jmccall@merrimackmortgage.com http://www.jen-mccall.com
For information on lake homes call 1-888-737-5550 or e-mail at info@nhlakesrealty.com or visit our websites to view lake homes in New Hampshire at www.nhlakesrealty.com or www.lakeorskirealestate.com.
Contact Carl Sack or Paula Hinckley #nhlakesrealty