Steps to Get Approval on a Second Home Mortgage

Are you planning to buy a second home? Whether it is a vacation home or a second residence, you will probably need a mortgage to fund the purchase. But how do you get approval on a second home mortgage?

Getting a mortgage for your first house probably taught you a few things about approval for home loans. You already know the basic steps. However, you can check out this article if you need a refresher.

What about getting approval for a second home mortgage? Many of the basic steps are the same. With that said, there are some steps you can take to increase your chances of approval. This post will cover those steps.

Get Approval on a Second Home Mortgage

Bigger Down Payment

First, you will probably need to save a larger down payment. You may have only put 5% down on your first home loan, but that won’t be enough for your second. You will probably need at least 10%. However, the more you can put down, the better your chances of approval will be.

Build Your Savings

Most lenders will want to see a good amount of money in savings before approving a second home mortgage. They will want to know that you will be able to pay if you lose your income for a while. If they see you have cash in reserve, it will do a lot to reassure them. You should have at least two months in cash reserves before applying for the loan.

Reduce Your Debt

Reducing your debt will also help you get approval. Like your primary mortgage, the lender will consider your debt-to-income ratio (DTI). Unlike when you went for your first home loan, you already have a mortgage adding to your debt. The lower you can get your DTI, the better. Of course, some lenders might allow a slightly higher DTI if you give a larger down payment.

Improve Your Credit Score

Your credit score will be another factor that lenders weigh during the approval process. However, the standards are likely to be higher this time around. Lenders will consider the second mortgage a substantial financial burden for most borrowers. As a result, many of them will want to see a higher credit score to approve a second home loan.

Buy a Second Home in Old Metairie

Are you considering buying or selling a home in the New Orleans area? We’d love to help you! Please click here for our contact page, and we’ll reach out to you promptly. Would you like to see more great info from Borrouso Realty? Please click here for our blog page. Please click here for our “About Us” page to learn more about my team.

Thanks for visiting!