Second Home Mortgage Solutions

I received some great mortgage information from Natasha Anderson with The Legacy Group. I have a friend who wants to move her parents from Michigan to Seattle so they can be close to their grandchildren. She plans to buy a home for her parents. My friend wanted to know how buying a second home would effect the mortgage rates for the loan she needed. I just thought I’d share the information Natasha shared with us:

If the home for grandma and grandpa is listed as an investment home then the interest rates will be quite a bit higher & the down payment has to be more (compared to a primary residence home purchase.) If the home is recorded as a 2nd home (only has to be 10 or more miles away from your home) then mortgage rates can stay low and the down payment can be as low as 10%.

Also, there is another, more creative way the house could be purchased….The grandparents are listed as the owners and then you co-sign for the mortgage. You can then gift the down payment money to the grandparents. The advantage of doing that is the interest rates again stay low (wouldn’t have to be further than 10 miles away like the 2nd home option) and you could get an FHA loan that requires only 3 1/2% down payment (FHA loan limits are now $506,000.)