Financial Options
By Bob Hartwick

There are many options when it comes to financing your vacation home purchase. Many use the equity in their primary residence and pay cash for their purchase. While others take advantage of their stock portfolio. If you do choose to finance your purchase, our local lenders regularly cater to borrowers who are from out of the area. They make the borrowing process easy and allow the necessary information to be provided via fax or email. As an added convenience, most closings can be done through the mail.

If you are considering purchasing a second home and are not going to pay cash, I highly recommend that you select a lender and obtain pre-approved for a mortgage prior to making an offer to purchase. There are many advantages to pre-approval. One, you know how much you can afford. Two, your down payment has been determined. Three, your offer will carry greater weight. And there is a large advantage when you are in a multiple offer situation. If you are biding with someone who is also financing their purchase, but is not pre-approved, your offer should be considered more desirable, and, if all things are equal, in most cases your offer will be accepted. Your pre-approval also will help level the playing field when you bid against someone paying cash.

As a second home purchaser you have many financing options. Most lenders in our area offer standard mortgages with 20% down and varying terms. However, some lenders will offer mortgages with less down depending upon a borrower’s credit history and overall financial strength. And do not forget, some sellers may be able to offer financing (Land Contract). Special Note: When buying from a developer/builder, lenders allow the seller in these instances to pay up to 6% of your down payment. When the amount of the down payment is a problem, utilizing a discount from the seller in this way may make the difference between purchasing or not.

In addition, shopping for a mortgage is like shopping for anything else, you need to understand what they are selling, compare it to similar offers, and negotiate, yes I say negotiate, your best deal. Some features of a mortgage are negotiable. Not all lenders can negotiate and in some cases there best offer is on the table, but it doesn't hurt to ask.

Following are links to some of our areas local lenders:

Fifth/Third Bank
Northwestern Bank
Client Mortgage Funding (Mortgage Broker)
Republic Bank

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Free Tax-Deferred Exchange Information
Did you know that there is a reverse 1031 Exchange, where an investor acquires the replacement property before closing on the relinquished property? Did you know that an investor could trade out of one property into several, or consolidate from smaller properties into one larger property?

Most people don't take advantage of a Tax-Deferred Exchange because they believe it is too difficult or they obtained incorrect information.