If you thought getting a mortgages for a primary residence was difficult, it can be even more challenging to obtain one for a vacation home. To you, a second home conjures up images of vacation fun and relaxation, but lenders see only risk. They assume that vacation-home buyers are extending themselves financially, making them more likely to default on the loans. And that risk is passed on to borrowers in the form of higher interest rates — as much as 0.5 percent higher than primary-residence mortgages. Mortgage insurance rates will also be higher, and you will have to prove that you have more available cash on hand. For example, if you are expected to have two or three months in mortgage payments available in cash for a primary residence, you'll likely need five or six months of available cash for a vacation home.
Tips: Personal loans are available from many sources, and are relatively easy to obtain either through the Internet, finance company, bank, or even a credit card company for anyone with collateral.
