Are you planning to invest in property? Real estate may be a real deal on the road to financial independence. And if you just want a place to relax on your off days, vacation homes at a beach or serene place will delight you.

Whatever your dream, Toto Mortgage Inc. can assist with investment property mortgages. And the best part? We don’t dish out cookie-cut solutions. Expect highly personalized attention and services.

Financing an investment or second home is unlike financing a primary one. These properties are more expensive to finance because they’re usually riskier in the eyes of lenders. That’s why they enjoy limited mortgage programs.

But first, let’s understand some terminologies:

Primary Residence

Your main, principal, or primary residence is a home where you live most of your time.

It’s eligible for federal law tax advantages. If you have many homes, you can elect only one to be your primary residence that enjoys the tax advantages.

Suppose you live in a house in Florida for 49 weeks in a year but spend 3 weeks at a timeshare in New York. Your voter registration card, driving license, and mail have Florida’s address. So Florida’s house is your primary residence.

But some cases can be complicated, like the one below.

Your job forces you to live in your Florida house for 26 weeks and a Chicago condominium for another 26 weeks. What address will your DL have? Between the two properties, which one does your family call home? You may have a “home base” even if most days find you traveling.

Vacation or second homes

Do you own any other home apart from the primary residence? Now that’s your second home.

Maybe it’s a vacation home where you spend your time off. It may also be a property you purchased due to regular traveling, like a condominium in Chicago. Sometimes, a hotel may be more expensive or not offer the comfort and peace you desire.

One thing to remember is that your vacation or second home isn’t your “home base.”

Investment property

Business people in the house? You can own real estate with the sole purpose of making money. We call it an investment property.

It includes ventures like flipping a land, house, or rental property.

The property can be a vacation home. For instance, you may rent out your beach house when you aren’t there.

How Financing A Vacation or Investment Property Differs From Funding a Primary Residence

Lenders view investment and vacation homes differently than primary homes. You see, a foreclosure will render you homeless if you default on the primary home loan. Who wants that? That’s why people commit themselves to clear their debt.

On the other hand, investment and vacation properties are often luxuries. They lack that incentive to make borrowers pay up their dues.

That doesn’t mean there’s no lender for such homes. It’s just that their loans’ terms may be stricter due to the heightened risk level.

The main home may require just a down payment of 5% (or less). This figure will most likely go up to 15-20% of the buying price for a non-primary property. Non-primary properties may also attract higher interest rates, and lenders might not be lenient regarding your debt-to-income ratio.

Investment and vacation properties may also differ when it comes to loan terms. In general, investment property loans are more expensive than second homes’ mortgages.

A reserve fund may be recommendable. If you own a primary house and an investment property, have available money to cover one year’s worth of mortgage payments on both homes.

Funding a Vacation or Investment Property With a Conventional Mortgage

Conventional mortgages are the most common options for people looking to own vacation or investment properties. The loans generally have fewer restrictions because they aren’t government-backed.

But the required down payment may increase from the typical 20% to 30% of the property’s purchase price. That is, if the home is for investment or vacation purposes.

What will boost your chances of getting approved and scooping better rates?

• Excellent credit history and score
• Attractive income and assets
• Proof that you can pay the monthly loan payments

The DTI (Debt-to-Income) ratio calculations don’t factor in your future rental income. You may be expected to have available funds to cover at least six months’ worth of mortgage payments.

So long as you qualify for the lender’s mortgage, be ready to own an investment or vacation home. Be open about your investment plan without misrepresenting your intentions.

Which Mortgage Options Aren’t Available for Investment and Vacation properties?

Generally, government-backed mortgages have lower qualification hurdles. However, they’re only available to borrowers planning to buy primary residences.

We are talking about:

• FHA (Federal Home Administration)
• VA (US Department of Veterans Affairs)
• USDA (United States Department of Agriculture)

Mortgage Programs For Investment and Vacation Properties

Toto Mortgage Inc. may bring your dream home within reach! We have your back from the prequalification process to getting a real estate agent.

30-Year Loan

The traditional 30-year loan comes with competitive interest rates and monthly payments. Depending on your home’s purpose, you may be able to get owner-occupied funding with reduced rates. Let our loan officers advise you if this program is the right fit.

15-Year Loan

Want to enjoy the same security but own your property sooner? Apart from the lower interest rates, this program slashes your payment period by half.

Other Loan Periods

We can also work with you to secure a 10, 20, or 25-year loan. With some lenders, you can even choose your own loan term—for example, between 7 to 30 years. Remember, the shorter the term, the lower your repayment period and interest rate.

Make Your Smart Choice

Investing in real estate has the potential for a tremendous pay-off. Getting the funds to finance an investment opportunity is a breeze if you know where to look.

As you weigh the conventional loan terms, consider the long-term and short-term costs and how your bottom line can be affected. That’s where Toto Mortgage Inc. comes in to help.

See if you can Get Pre-Qualified

Rush ahead of the buyers “in the know” to grab your fantastic investment property. See if you can get pre-qualified today to boost your bargaining power.