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Rick Miritz

Prepare for your dream home or vacation home!

You might know quite a few people considering purchasing their dream home in a “destination” due to the prolonged Covid-19 circumstances. Others, due to more flexible “work remote” schedules, may be deciding it is time to invest in that vacation home. Market data shows us that many such people are “shopping” for homes right now. So, unless you are ready for tough competition in this seller’s market, buyers might want to take a “wait and see” approach.





So, if you are not ready yet we have a couple of tips gathered to help you be ready down the road:


1. Finance


Whether you want to buy your dream or vacation home, we need to make sure that you can afford the place you want. It might be better financially for you to rent or maybe you can use some of your savings into down payment to afford the home you want.


Start by using this rent vs buy calculation to figure out what is best for you: https://www.moneyunder30.com/rent-vs-buy-calculator


IF it seems like buying is your option then use the calculator by Zillow: https://www.zillow.com/mortgage-calculator/house-affordability/


Also, if you are looking for a vacation home it is good to know that it has to be at least 50 miles from your home: “A vacation home is typically defined as a secondary residence at least 50 miles away from your primary residence. If it’s any closer to your primary home, you’ll have a tough time explaining that to your loan officer. Having a vacation property that is close to your primary residence can be an indicator that the intent of your vacation home is to rent it rather than for personal use, which would qualify the property under a different loan type.” - Zillow



2. Savings and investment


Keep saving as much as you can each month to increase your down payment, if you can’t save more consider investing your money in a low risk fund to slowly increase your value.


3. Check your credit score


Your credit score can impact the interest rate you qualify for, the sooner you know your credit score the more time you will have to improve it. There are several ways to do it, we would recommend talking to your mortgage broker.


4. Get to know the market


Write down your home requirements, the “must haves”, the “nice to haves” and what you don’t want. Go to house showings and learn about the different houses and neighborhoods to narrow down your list. Even if you are not ready now, educating yourself help you buy with confidence later.


5. Gather information for pre-approval by a quality lender:


Make sure you have all the documents you need to get pre - approved; two years of tax returns, W2s, 2-3 months of pay stubs and bank statements. Some lenders may want to see evidence of your down payments as well. IF you are looking to buy a second home, then it means you need a second mortgage which could be a challenge. Not only will you need to meet the debt-to-income requirements for carrying two loans, but you’ll also need to meet the stricter requirements for vacation home loans or investment property loans. Read more here.


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