Financing Vacation Homes

In recent years lenders have also made it easier to finance vacation homes.

“In most situations, the interest rate on a second home is the same as a primary residence,” said Doug Perry, a senior vice president at Countrywide Home Loans, one of the nation’ s biggest lenders.

“It’s an acknowledgment that people have more second homes now,” he said.

According to the Realtors’ group, of the owners who have bought vacation homes since 2003, 23 percent used the proceeds from other real estate sales to finance their purchases, and 19 percent used equity or sales proceeds from their primary residences.

When a vacation house is bought by several people — two couples, perhaps — tax deductions are simply split in line with the ownership shares, he added.

But too often couples or disparate family members do not weigh the factors that can complicate multiparty vacation home ownership, said Mr. Romano of Shelter Rock.

Among other things, if one person has a credit rating that is significantly different from those of the other prospective owners, snags can result.

Mr. Romano said that he discusses how one person’ s financial situation could affect his or her ability to carry the costs of the venture and how it could raise the borrowing cost for the whole group. (Read More)

Source: NY Times

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