What About Second Homes?

I want to buy a second home in a couple of years; what can I expect about financing? Several customers lately have talked to me about buying a second home. Now may be the best time to take the plunge.

The housing market for second homes is wide open and rates are fantastic. Markets at the beach and in the mountains (Gatlinburg, TN) have great opportunities for buyers to get into the market at a reduced price. Over the last several years, marginal buyers have been encouraged to enter the second home market in resort areas; being promised by real estate management firms that these properties would cash flow themselves. This may not have been unrealistic when buyers bought into the market, but during the summer of 2008 we saw gas prices at $4.50 per gallon.

This rise in travel costs had the affect of creating an oversupply of rental properties in resort areas. Marginal buyers, those who had to have the rental income to afford the payments, couldn’t survive a slight downturn in the market. As high gas prices turned into a “downturn” in the economy these marginal buyers could not afford to keep up with the payments. This accounts for high foreclosure rates in these resort areas. That high foreclosure rate creates opportunities for new buyers in the marketplace.

For the moment, second home financing is being treated like a primary residence for the most part. Rates are still very attractive and borrowers can get into the market with low down payments. So if you, or someone you know, have thought about getting a second home, now is the time to discuss it with your lender.

This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.

Separations Can Kill a Couple's Credit

A friend of mine just separated from her husband. I ran into her and she asked me what she could do if the house went into foreclosure. I wish this was not a common occurrence, but unfortunately it happens very often.

How does it start? When she moved out, the mortgage was paid up and on time every month. She moved out because he has not been trying to find work. Without any income and her second income, he will not be able to make the payments. The divorce will take several months if not contested and if late payments begin they will affect her credit also. They are both on the home loan; both could have their credit ruined for many years.

Somewhere in the separation process, couples need to realize that the credit will have to be separated also. She must get off the joint home loan and he cannot afford the payment by himself. The only way out of this is they must realize the house will have to be sold. Somewhere in the legal process of divorce, financial planning needs to be required. Two people separated cannot maintain the lifestyle that they had as a couple. Very often they cannot separate the debt, because neither qualifies for everything they have now by themselves.

If you are going through a divorce, call to find out more about your financial options and to begin planning for recovery. (865) 742-3384

This blog is for informational purposes and is the opinion of the writer. In financial matters always solicit professional advice and legal counsel if necessary.