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Buying a Vacation Home while still planning to rent in the city: Is this a Primary Residence?

My husband and I rent in Boston, and plan to do so for at least 5-10 more years. We have enough money to buy a small lake house in a rural area about 45 miles away. We would use it on weekends and in the summer with plans to keep it for 30+ years and never to rent it out. In 5-10 years, once we decide to stop renting, we would probably buy a 2nd home closer to the city. How do I handle this situation with mortgage lenders? Obviously we want the best rate, but don't want to commit fraud. Any suggestions? by BostonRenter from Boston, Massachusetts. Jun 13th 2012 Reply


William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,145 contributions

You are purchasing a 2nd home.. Rates and fees are about the same on the conventional side and it's clear your intent is to purchase a vacation home, so it's not an issue.. The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jun 13th 2012
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Bert Carpenter (BertCarpenter)
#38 ranked lender in Arizona - 1,815 contributions

If the location is within a reasonable commute and you were to actually live there more than half the year (183 days), then you could call it your primary residence which would make all of the mortgage programs (VA, FHA and Conventional) available to you. However, if you do not intend to live there more than half time, your rental would remain your current residence. You would likely use a "Second home" loan, which is a conventional loan product with pricing very similar to that for a primary residence, but you would not have the ability to use either FHA or VA. When you are ready, work with a local Mortgage Banker/Broker, rather than one of the big banks or big national mortgage factories. Unlike a bank employee, who is most likely just an order taker, a Mortgage Broker/Banker is Trained, Tested and Licensed in all aspects of Mortgage Origination. He/She will have access to loan products of many lenders, not just those of one bank, and can properly guide you. But more importantly, He/She is trained to take a look at the various different options available to you and guide you into the one that makes the best sense for your situation. Don't forget to check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

Jun 13th 2012
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Thanks, Paul and Bert. I should have been more clear, but due to busy lives, we probably won't be spending every weekend there - likely 1-2 weekends each month, and more in the summer, bit still less than 100 days/year. Bert - we have been preapproved for a 30 year fixed at 3.83% (but as a primary mortgage). Do you know how "Second Home" loans compare? Will it be much higher? Great advice to go through a local lender too - thanks.

Jun 13th 2012
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Richard Shapiro (RShapiro)
#12 ranked lender in Massachusetts - 71 contributions

Generally the rates are the same for primary and second/vaction homes. You should be fine as this is a situation we have dealt with in the past.

Jun 13th 2012
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Susan Frenette (susanfrenette)
#7 ranked lender in New Hampshire - 6 contributions

This home would be considered your second residence, but that is not a problem at First Eastern/FFSB. Our 2nd Home program has the same terms/rates/closing costs as our Primary Residence program. Please contact me anytime if you have any questions - we lend throughout New England and Florida.Kind regards,Susan M. FrenetteMortgage Officer, Construction Loan Specialist NMLS# 756109 -- Certified FICO ProfessionalFirst Eastern Mortgage, a division ofFirst Federal Savings Bank of Boston167 South River Road - Suite 1, Bedford NH 03110-6931800.999.7788 - 603.622.3017 - Fax 603.622.3789Cell/Text 603.345.9472

Jun 13th 2012
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Michelle Curtis Loan Originator NMLS 401173 (EmbassyFundingLLC)
#28 ranked lender in New York - 2,237 contributions

This would have to be your second or vacation home. The rates are generally about the same or just a little bit higher. All the best!!

Jun 13th 2012
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Brett Pehrson (brettpehrson)
#19 ranked lender in Utah - 226 contributions

I would agree this sounds like it should be processed as a second home, then. The main thing you'll want to make sure is disclosed in the underwriting of your loan is that you will maintain a second housing payment to rent in the city. You'll likely end up with a similar rate as you've been quoted; but terms are often different as it relates to down payment and/or mortgage insurance. If you're putting 20%+ down, though, you shouldn't have any problems. If you disclose it properly on your application and the underwriter determines it should go through as a primary residence, anyway, then you shouldn't have any trouble.

Jun 13th 2012
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Richard Shapiro (RShapiro)
#12 ranked lender in Massachusetts - 71 contributions

we have been preapproved for a 30 year fixed at 3.83% (but as a primary mortgage). Do you know how "Second Home" loans compare? Will it be much higher? Great advice to go through a local lender too - thanks._______________________________________________________________________Rates for second homes are the same as primary. The only other thing that could push the rate up a little is a lower down payment and/or a lower credit score (under 740)

Jun 13th 2012
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Great advice, everyone - thanks!

Jun 14th 2012
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