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Financing a Vacation Home

RobertJ
Established Contributor

Financing a Vacation Home

My wife and I are currently looking for a vacation home.  Our primiary residence is a home in Northern Virginia with around $200k of equity.  We only have around 5% to put down, so our options are limited.  We could always wait, but with the real estate market the way it is right now, there are a ton of listings on a lake we've looked for a few years that are all of the sudden for sale.  Lake front homes were seldom listed when the market was down.  

 

This weekend we found one we fell in love with instantly.  It lists for $430k, and they recently dropped the price.  I think we could get it for around $420k with some closing costs covered by the seller.  I filled out a loan application for NFCU's Military Choice program, but the terms are not great.  I understand we don't get the best rate due to the low down payment as well as this not being our primiry residence, but I was hoping for better than 3.85%.

 

My wife's credit profile is similar to mine (see sig), so we have good credit.  Our combined income is around $250k a year, and we have very little debt.  We own my wife's primary car (2016 Jeep Patriot) and are only paying on my truck.  My wife has about the same about of CC debt that I do at just over 1% total UTIL.  Any suggestions other than NFCU?  Thank you.



8 REPLIES 8
Mortgage-Specialist
Established Contributor

Re: Financing a Vacation Home

You would need 10% down to do a second home refi through a standard lender. You can pull cash out from your primary residence for down payment

Message 2 of 9
RobertJ
Established Contributor

Re: Financing a Vacation Home


@Mortgage-Specialist wrote:

You would need 10% down to do a second home refi through a standard lender. You can pull cash out from your primary residence for down payment


I was thinking about that option as well.  Thank you for the advice.



Message 3 of 9
RobertJ
Established Contributor

Re: Financing a Vacation Home

If there are other posters searching this scenario, here are the final data points:

 

We ended up getting the house for the full asking price but with 3% seller assist returned to us at closing which pretty much covered the closing costs.  We did go with NFCU and only have to put 5% down.  The interest rate is not great as stated above, but we plan to refinance in 4 years after I retire when we will have the equity from our main house for the down payment after it's sold, so in the total scheme of things it's not a horrible deal for a luxury item.



Message 4 of 9
RobertJ
Established Contributor

Re: Financing a Vacation Home

One more data point I didn't mention before is that NFCU does not require PMI on this "Military Choice" product offering even with just 5% down which more than negates the slightly elevated interest rate.  

 

We close on the 19th and are beyond excited!  NFCU has been pretty good to work with.  Communication with our loan officer was hit or miss initially, but the loan processor has been amazing.  Pictures for those of you that are interested.  The house comes completely furnished which was huge for us since it will initially be a vacation home.  Even the wall hangings and dishes are included!

 

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Message 5 of 9
CAS2019
Frequent Contributor

Re: Financing a Vacation Home

How exciting!  Congratulations!!! 🎉🎈🍾🎊 

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Message 6 of 9
RobertJ
Established Contributor

Re: Financing a Vacation Home


@CAS2019 wrote:

How exciting!  Congratulations!!! 🎉🎈🍾🎊 


Thank you!  4 more days!



Message 7 of 9
NRB525
Super Contributor

Re: Financing a Vacation Home

Congrats! Nice looking place. 

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
Message 8 of 9
RobertJ
Established Contributor

Re: Financing a Vacation Home


@NRB525 wrote:

Congrats! Nice looking place. 


Thank you!  We closed Friday and stayed over the weekend.  We're headed back up for a week to work on things.  Need to get a snow blower, etc.  I had to buy a bunch of tools last weekend.  Can't wait for summer!



Message 9 of 9
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