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 Rates subject to change without notice

 Loan amounts up to $548,250

Second Home Mortgage Rates

Second Home | Vacation Home Mortgage Rates

Owning a second home means avoiding those terrible short-term home rental disappointments and those nothing-to-do-this-weekend blues. It’s your place, only better. It’s somewhere cool.

Finding the best loan offer for your second home begins with shopping mortgage rates. With the Fidelity Home Group’s Mortgage Rate Quote tools, punch in a little data and you will receive an interest rate options in no time.

 

SEE SECOND HOME MORTGAGE QUALIFICATIONS

 

What are the differences between a mortgage on a primary residence and a mortgage on a second home?

With Second Home / Vacation Homes, we are a little more cautious on second-home financing, so you may find that making a decent-sized down payment helps seal the deal. It doesn’t have to be a huge amount: 10% should work, in most cases.

Debt-to-income ratio requirements often are a little skinnier, too. We may also look for two months’ payments in cash reserves — or more, depending on your credit profile.

And loan terms may vary a bit, depending on if the second home is a single-family unit, condo or manufactured housing.

How do mortgage rates on second homes compare to other mortgage types?

The interest rate on a second home can be a little higher than the rates you find on primary mortgages — maybe not by much, though. 

What other options are available to finance a second home?

Using the equity built up in your primary residence can be a way to finance your home away. A home equity line of credit or home equity loan might help with the down payment, though you’ll still need to have the financial stability to qualify for the second home mortgage.


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Know the difference between interest rate vs. annual percentage rate, APR

It’s easy to confuse a mortgage interest rate and APR, but they’re quite different. The interest rate is the cost of borrowing money for the principal loan amount. It can be variable or fixed, but it’s always expressed as a percentage. An APR (annual percentage rate) includes the mortgage interest rate plus other costs such as broker fees, discount points and other lender fees, expressed as a percentage. APR is often higher than your interest rate.

What are the different types of mortgages?

 

Fixed-rate mortgages

Fixed-rate mortgages are the most common mortgage type. The interest rate remains the same for the life of the loan. With a fixed-rate mortgage, your monthly payment won’t change (outside of property taxes, insurance premiums or homeowner’s association fees).

Adjustable-rate mortgages

Adjustable-rate mortgages, or ARMs, have an initial fixed-rate period during which the interest rate doesn’t change, followed by a longer period during which the rate may change at preset intervals. Generally, interest rates are lower to start than with fixed-rate mortgages, but they can rise, and you won’t be able to predict future monthly payments.

Jumbo mortgages

Jumbo mortgages are conventional loans that have non-conforming loan limits. This means the home prices exceed federal loan limits. For 2020, the maximum conforming loan limit for single-family homes in most of the U.S. is $510,400, according to the Federal Housing Finance Agency. Jumbo Mortgages are more common in higher-cost areas and generally require more in-depth documentation to qualify.

Government-insured loans

Government-insured loans are backed by three agencies: the Federal Housing Administration (FHA Mortgages), the U.S. Department of Agriculture (USDA Mortgages) and the U.S. Department of Veterans Affairs (VA Mortgages). The U.S. government isn’t a mortgage lender, but it sets the basic guidelines for each loan type offered through private lenders.

Choosing the right mortgage

Narrowing your mortgage choices can be difficult. Here’s a list of pros and cons of each of the options mentioned earlier to help you decide.

 
  PROS CONS WHO IT’S BEST FOR
Fixed-rate mortgages Pros
  • Rates and payments remain constant, despite interest rate changes.
  • Stability makes it easier to budget.
  • Simple to understand.
Cons
  • Interest payments tend to be higher.
  • To get a lower rate, borrowers have to refinance the loan — and pay closing costs again.
Who it’s best for Borrowers who plan to stay in a home many years and want predictable, stable payments at the same interest rate for the life of the loan.
Adjustable-rate mortgages Pros
  • Feature lower rates and payments early in the loan term.
  • May qualify for more house because payments are lower (initially).
  • Help you save and invest more money with a lower payment early in the loan.
Cons
  • Rates and payments can rise over the life of the loan.
  • Higher rates — and payments — when loan resets can be hard to manage.
  • ARMs are difficult to understand.
  • Lenders have much more flexibility to customize.
Who it’s best for Borrowers who don’t plan to stay in a home for more than a few years — especially when rates are higher.
Conforming mortgages Pros
  • Can be used for a primary home, second home or investment property.
  • Overall borrowing costs tend to be lower than other loan types.
  • PMI is cancellable once you’ve gained 20 percent equity.
  • Put as little as 3 percent down for agency loans.
Cons
  • Minimum FICO score of 620.
  • Debt-to-income ratio of 45 to 50 percent.
  • PMI typically required if your down payment is less than 20 percent.
  • Significant documentation required to verify income, assets, down payment and employment.
Who it’s best for Borrowers with strong credit, a stable income and employment history, and a down payment of at least 3 percent.
Government-insured mortgages [ FHA, VA USDA ] Pros
  • More relaxed credit requirements.
  • Don’t require a large down payment.
  • Open to repeat and first-time buyers.
Cons
  • Mandatory mortgage insurance premiums that cannot be canceled on some loans.
  • Higher overall borrowing costs.
  • May require more documentation to prove eligibility.
Who it’s best for Borrowers who have low cash savings, less-than-stellar credit or can’t qualify for a conventional loan. VA loans tend to offer the best terms and most flexibility compared to other loan types for military borrowers.
Jumbo mortgages Pros
  • Borrow more money to buy a home in an expensive area.
  • Interest rates tend to be competitive with other conventional loans.
Cons
  • Down payment of at least 10 to 20 percent is needed.
  • Minimum FICO score of 660, but average is typically 700 or higher.
  • Maximum DTI ratio of 45 percent.
  • Must have significant assets (10 percent of the loan amount) in cash or savings accounts.
Who it’s best for Affluent borrowers purchasing a high-end home who also have good to excellent credit, high incomes and a substantial down payment.

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*Assumes 2.799% APR, 20% down payment, and conforming 30-year fixed rate first mortgage on a single family, primary residence. The monthly payment you enter includes only principal and interest. Additional required amounts such as taxes, insurance, home owner association dues, assessments, mortgage insurance premiums, flood insurance or other such required payments should also be considered. Not all individuals will qualify for a mortgage loan based on the payment entered. Rates cited are for instructional purposes only; current rates are subject to change at any time without notice.  **Posted APR is based on Mortgage Assumptions
 
 
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