Need Advice on Buying Condo in Another State

[J9News]

Hello All,

Your posts have been so helpful about the entire mortgage process so I want to thank everyone for sharing so generously on this forum.

I have a unique situation and could use your help with any advice or direction.

I live in CA and want to purchase a condo back home which is in the mid-west.  My father isn't doing well and I'd like to have a base there. I work and rent here in CA. This condo wouldn't be my primary residence but I can make work from home arrangements and spend significant time there. My question: Is there any other type of mortgage loan to get in this situation than to call it a second home? If it were primary I could put 5% down but with this 'second home' designation, I had been told that the downpayment would be between 10% and 20%. 

I could put down 20% but I'd have to really dig into my 401K which comes at a cost. Repayment is bi-weekly and comes out of my paycheck. On top of that I may have $5K is closing costs. That is a lot of money to materialize in 30 days.

Any advice on if I can get around that 10-20% downpayment and whether I am stuck with a second home designation?

Thank you!

[Anonymous]

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@J9News wrote:

Hello All,

Your posts have been so helpful about the entire mortgage process so I want to thank everyone for sharing so generously on this forum.

I have a unique situation and could use your help with any advice or direction.

I live in CA and want to purchase a condo back home which is in the mid-west.  My father isn't doing well and I'd like to have a base there. I work and rent here in CA. This condo wouldn't be my primary residence but I can make work from home arrangements and spend significant time there. My question: Is there any other type of mortgage loan to get in this situation than to call it a second home? If it were primary I could put 5% down but with this 'second home' designation, I had been told that the downpayment would be between 10% and 20%. 

I could put down 20% but I'd have to really dig into my 401K which comes at a cost. Repayment is bi-weekly and comes out of my paycheck. On top of that I may have $5K is closing costs. That is a lot of money to materialize in 30 days.

Any advice on if I can get around that 10-20% downpayment and whether I am stuck with a second home designation?

Thank you!

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I'm sure someone more knowledgable than me will chime in soon, but I found this confusing. It looks like you rent in CA not own. In which case, would the place you buy in the mid -west be considered a 2nd home?

[J9News]

Sorry for the confusion. It would be my first home purchase but I'd stlll have California as my primary residence. My job is here but property is too expensive for me to buy which is why I want to own in the mid-west

[StartingOver10]

The second home type loan sounds like your solution. I see second home loans (even if you haven't purchased a primary residence) in other states with 10% down frequently.

The advantage to putting down 20% is then you won't have to pay pmi. Why don't you try to have the seller pay your closing costs?  Is your Father wiling to contribute since he will be there too? Or did I misread that part?

[Anonymous]

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@StartingOver10 wrote:

The second home type loan sounds like your solution. I see second home loans (even if you haven't purchased a primary residence) in other states with 10% down frequently.

The advantage to putting down 20% is then you won't have to pay pmi. Why don't you try to have the seller pay your closing costs?  Is your Father wiling to contribute since he will be there too? Or did I misread that part?

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Second homes require 10% down and investment properties can go as low as 15% down. You may be able to swing it as a "second home", but your lender will have to answer that for you. Sometimes second homes can be tricky.