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 co-borrower income.  If you cur­rently retain two or more res­i­dences else­where and are not relo­cat­ing to Chicago, con­tin­gen­cies must be avoided to struc­ture the financing.