FINANCING NEEDS

CHICAGO VACATION AND SECOND HOME MORTGAGE LOANS -  VACATION / SECOND HOME RESIDENCE

While financing vacation homes is relatively simple, it is most challenging in figuring out how to leverage the home with larger down payment requirements than that of primary residences.  A combination of factors must be looked at to determine from where to draw funds (similar to investment properties).

  1. Current personal liquidity retained and from what types of sources
  2. Current equity and dollar amount / position
  3. Election by the tax payer of the property in question
  4. Time utilized annually / if rental income is subsidizing the expenditure
  5. Interest deductibility caps and / or PRCG tax exclusion potential (future occupancy)

CHICAGO SECOND HOME MORTGAGE LOAN PROGRAMS

The same types of programs and loan instruments for primary residences are available for second homes, i.e. ARM loans, Interest Only loans, Fixed rates etc.  The underlying difference lies in slightly tighter credit, property type, expense ratio, reserve and leverage ratio requirements.  For example, Co-ops are usually only eligible in Illinois, New York (NY) and New Jersey.  100% financing is generally not available even in normal, unimpaired credit markets.  When purchasing a second home, you will need to decipher whether cashing out current equity on another residence, using portfolio investment monies or using cash on hand will provide the most sensible solution to leverage.  Tax implications are prevalent and preparation in advance should be carefully considered.  Additionally, some qualifying obstacles you can face are mileage limitations for as to avoid investment property classification as well as restrictions for trailing coborrower income.  If you currently retain two or more residences elsewhere and are not relocating to Chicago, contingencies must be avoided to structure the financing.

 

CALL
JON MILLER
DIRECTLY AT:
312.738.6013 jmiller@chicagobancorp.com