If you are thinking about financing the purchase of your second home or vacation home you should obtain financing pre-approval from an established lender before you begin your search. Please do not rely solely on your local home town bank. It’s always smart to get several opinions as rates, terms and conditions can vary greatly from institution to institution. If you are not a Florida resident beware that your local bank may not be licensed to do business in Florida. Even if they can do business in Florida it is unlikely that they will understand the second home or vacation home market for the area in which you are looking.
Before talking with a mortgage broker or banker spend some time thinking about the process. Contact your accountant or attorney to see how a mortgage will affect your tax situation. Then ask your exclusive buyer’s agent for recommendations of local established, professional brokers and/or bankers. Also, while internet mortgages may seem easy consider brick and mortar brokers and bankers as well. Financing a home is a complicated undertaking and there can be problems along the way. Your or your buyer agent’s ability to sit down across the table from the mortgage broker may be more helpful than trading e-mails or texts with the internet broker.
Here are some questions that you should ask of any potential lender:
Will rates vary depending upon whether this will by my primary or secondary residence?
If I choose to rent out the property will that affect my rates?
Does the lender offer “in-house” or portfolio lending programs? Will they hold the mortgage themselves or sell it to another company?
How will the amount of down payment affect the rate?
Will there be any prepayment penalty?
How long will I have to lock in my rate?
Will they give you a good faith estimate of costs associated with the loan?
Will they provide a pre-approval letter?
In addition to the above make a list of any additional questions that you may have.
Rates and service levels will vary so you will want more than one quote. Also, nothing says that you cannot take the lowest quote back to the other lender and ask them to meet or beat it!
Mike Badenoch is an exclusive buyer agent and broker associate with Buyer’s Choice Realty Group, Inc., Sanibel, Florida. Buyer’s Choice Realty Group, Inc. is an exclusive buyer agency representing only real estate buyers on Sanibel and Captiva Islands, Fort Myers and Cape Coral, Florida. Feel free to call Mike at 239-292-1233 with any questions you may have or visit his web site at www.yourexclusivebuyeragent.com.