Although many prospective homeowners across the United States are benefiting from near record-low mortgage rates, a February 8 article from MarketWatch reveals that people are encountering difficulties when it comes to taking out a loan for a vacation home.
The source cites a few reasons for this, such as lenders not wanting to underwrite mortgages when it’s possible that home prices may fall further and apprehension about approving loans when appraisal reports are less than ideal.
Many people take out jumbo mortgages for vacation homes, which can be upwards of $625,500 depending on the area, but experts say there are very few lenders that will provide these. Because of this, some prospective vacation homeowners are choosing to pay with cash. Another option buyers can look into, however, is working with national banks in addition to mortgage brokers, as these larger institutions may have access to more lenders.
“You are down to a sub-sub-genre of the lending market at this point, so there will likely be fewer lenders and choices,” Keith Gumbinger, vice president at HSH.com, a website that provides mortgage information, said about jumbo loans.
In spite of the challenges that stand between prospective buyers and their vacation homes, many people are finding ways to make it work. As a result of this, luxury home sales are up in certain parts of the country such as Vail Valley, Colorado, and Hilton Head Island, South Carolina.
In the case of borrowers taking out jumbo loans, lenders will want to ensure they have quality loan management software in place. Paired with an amortization calculator, this will help guarantee that any repayment plans designed for hopeful homeowners fit within their budgets.