I want a beach condo....

[fishbjc]

to use as a second home.  I need a 10 year mortgage, then may move into it full-time upon retirement.

  I may 'rent' it to family members when we're not using it for a percentage of the mortgage.  Is there a loan program that will accept a 3.5% down and allow the 'rental'?  Or do I need the full 20% and go conventional? 

Thank you!

[ezdriver]

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@Anonymous wrote:

I can get a 2nd home done for you with 10% down. mod cut

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Dude ... you may want to review the terms of use here. I'm sure a moderator will undoubtedly chime in shortly.

[ShanetheMortgageMan]

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@fishbjc wrote:

to use as a second home.  I need a 10 year mortgage, then may move into it full-time upon retirement.

  I may 'rent' it to family members when we're not using it for a percentage of the mortgage.  Is there a loan program that will accept a 3.5% down and allow the 'rental'?  Or do I need the full 20% and go conventional? 

Thank you!

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Investment properties need 15% down, and a vacation/2nd home needs 10% down.  It's still permitted to rent out a vacation/2nd home periodically as long as you will be using it for a portion of the year and there are no permanent tenants.  A primary residence is the only type of occupancy that you can put just 3.5% down with, and like the description says you need to occupy it as your primary residence, meaning at least 51% of the year (186 days).

[fishbjc]

Thank you Shane!  We're working hard to make this a reality! 

[coterotie]

Shane, thanks for the info.

Here is the plan I am working on.

We're buying a home in my FIL's name that is handicapped accessible using his VA benefit.  We live with him and provide for his care along with other various folks.  Just waiting on an appraisal and some possible renegotiation.

We're going to renovate our current house, as a rental property.  Homes within our "neighborhood" that have a less than 2K/month rent have been renting within 2 weeks of being marketed so I feel pretty good about getting it rented quickly.

The market is starting to firm up in the beachy areas and we feel like we need to pull the trigger quickly before we're completely shut out of the market.  I can cover 150% of the mortgage and insurance by renting 16 weeks per year.

We have about 100K in liquid cash reserves and will borrow 100K against the rental property that will appraise after renovation at 225 (my budget for the reno is 38K) So we'll actually have 160K in cash.  I want to either pay down the loan on rental property or use it as a reserve (the rate is 3% and I typically return about 7% on my conservative portfolio's)  for contingencies.  Have another 300K in 403(b) plans.  Also have some other undeveloped land.

So we're looking in the 200K to 325K range on the beach house or condo.  Income is 16K per month gross, total outflows will be less than 1K per month.  We're not counting the rental income in the calculation.

How much/little down are we looking at?  Scores are in the 690 to 710 range.

[ShanetheMortgageMan]

If your income is $16k/mo and expenses are only $1k/mo, then you should have no problem putting just 10% down on a $325k sales price as a 2nd home.

[coterotie]

Shane, thanks for responding.

Since the beach home will actually be the only "home" in our name, we'll be residing at another "home" that isn't in our name do we put down on the app that it is a second home?  We'll likely use the homestead exemption for taxes on that house because it will be valued higher than our rental house if that makes a difference.  Also, our plan is to rent it out during the high season, use it on weekends and school breaks all the rest of the time.  I keep my boat there, so we still go down to fish and tube on the weekends during the high season.

Fortunately the "vacation" property is only 35 minutes from our house(s) so we can hop on the boat play around a couple of hours and be back in town almost as quickly as if we lived down there.  We just can't decide if we want a condo with zero maintenance effort or a single family with a boat house and all the maintenance that that entails.

[ShanetheMortgageMan]

If you won't be occupying it for a majority of the year then it's considered a second home (or rental property if you plan to not occupy it at all or rent it out permanently).  Further, you keep referring to it as a vacation property, which further reinforces what you plan on using it for.  Second homes qualify for the same interest rates as primary residences.

[coterotie]

Thanks,

I just don't want to put down that it is vacation property and then have someone say it isn't because we don't have a non-vacation home or vice versa.  The plan is to rent it enough to break-even with a small reserve.  If we end up with the condo, we'll still have full use of the property, (pool, meeting room etc) a nice covered parking spot at the beach and a hurricane hole for the boat.  They stay completely rented the entire summer, but the rest of the year not much use. 

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@ShanetheMortgageMan wrote:

If you won't be occupying it for a majority of the year then it's considered a second home (or rental property if you plan to not occupy it at all or rent it out permanently).  Further, you keep referring to it as a vacation property, which further reinforces what you plan on using it for.  Second homes qualify for the same interest rates as primary residences.

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