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You need cash and Batteries May Face Higher Rates 

Getting a mortgage for a home these days can be tough, and get one for a second home can be even more difficult. 

In the wake of the collapse of the mortgage market, lenders require especially large payments to individuals for the purchase of a holiday home or an investment property, a group they regard as particularly risky. 

But as we approach the holiday season, to come to the treasury in May to be a real challenge. Home-equity lines of credit, once a reliable source of cash, are more readily available for homeowners. The popular low-payment of loans by the Federal Housing Administration are limited to principal residences. And private mortgage insurance required of borrowers who can not afford a down payment of 20 percent is almost impossible to find in areas where home prices are falling. 

Because buyers of second homes have always been perceived by lenders as a greater risk, they tend to pay higher interest rates on their loans, ranging from a quarter to half a percentage point. 

"The idea is that if you have two houses and you can not afford one, you can choose to keep the roof over your head," said Eric Gates, president of Apex Home Loans, a brokerage d Mortgage Bethesda. 

And buyers who intend to rent their units have even more hoops to jump through that those who do not, said Steve Calem, President of Capital Funding Group, a mortgage firm of consultants and advisers. For example, they must obtain an assessment that evaluates the rental rates in the region in addition to the usual paperwork, Calem said. 

All these theoretical issues in May for many buyers, who tend to be a relatively easy, according to a new survey by the National Association of Realtors. 

Last year, more than four out of 10 buyers and investment of more than three in 10 buyers of holiday homes, paid cash for their properties, the investigation revealed. The median household income was $ 97,200 for a buyer of vacation and $ 85,000 for an investment buyer - compared to the median of $ 73,300 for people buying a primary residence. 

Dudley Dworken the Potomac do not pay all cash, but he made a deposit of 35 percent when he bought a vacation house in Ocean City late last year. He therefore had no difficulty obtaining a loan, he said. He did not harm it had excellent credit rating and 95 percent equity in their primary residence. 

Dworken finished with exactly what he wanted, after two years of exhaustive research: a beach condominium near the house at a fair price. He could buy earlier, he said, but he held the prices had not yet bottomed out. 

"I think we bought at the time," Dworken said. "Property on the beach is now dead." 

After the housing market Tanked - and the economy has had with it - the median sales price of a holiday home fell 23 percent, to $ 150,000, last year the previous year, the team survey found. The median price of a home investment dropped 28 percent, to $ 108,000. 
The volume of sales also suffered. Holiday home sales fell by about 31 percent, to 512,000 last year, while investment housing sales slid 17 percent, to 1.12 million, said the investigation. 

However, changing demographics of the United States should help to maintain long-term demand for second homes, said Lawrence Yun, the real estate group of the Chief Economist. 

About 39 million people in this country are 50 to 59 years - an age group that has dominated sales in the first part of this decade. Approximately 45 million people from 40 to 49, a group that should contribute to the second house sales over the next decade, "said Yun. 

Kathy PANCO, Dworken estate agent, said the oversupply of Ocean City condos for sale has started to decrease, probably due to increased demand. The number of condos for sale from March 31 was down 12.2 percent from the same period last year, she said. Condos represent the bulk of the sales market in the resort. 

Fannie Mae, the government managed mortgage financier, said it is doing its part to help the second largest market by setting guidelines that make it easier for well-funded investors to buy houses. 

In February, Fannie Mae loosened its restrictions on the number of loans an investor can take. It raised the limit from four to 10 provided that purchasers comply with certain requirements, such as proof they have enough money in reserve to pay the mortgage, if they can not immediately rent the property . 

Lenders wishing to sell their loans to Fannie Mae and Freddie Mac must meet standards established by the two institutions. 

"For investors who are maintaining their properties and continue to invest, we want to be flexible," said Amy Bonitatibus, a spokesman for Fannie Mae. 

But again, some real estate professionals say Fannie and Freddie were suppressed by other means, especially when it comes to condos, which have more control because they are generally regarded as the link weaker housing market. Some in the industry that companies impose rules both are more strictly enforced and interpreted more narrowly, and certainly how Ines and David Jones see. 

Clarksville The couple tried to refinance their condo in Ocean City, but could not because their lender the building as a condo hotel. " 

By definition, condo hotels have a registration office, retail space, maid service and a mix of owners and tenants. Fannie Mae and Freddie Mac have long refused to purchase loans for units of this type of building, which they treat as commercial property. 

But what confuses David Jones is that he and his wife own their condo since the late 1970 and refinanced several times without any problem, he said. 

"Why is the mortgage we have right now, but for this condo refinancing mortgage on the condo is not appropriate?" Jones. 

Given the potential problem, it is not surprising that many buyers to pay in cash. 

But for those who can not, there are other ways to avoid banks, like Tom and Johanna Wells Aldie, Virginia, was discovered. 

When they bought a condo in Virginia Beach, they have opted for a type of seller financing that allows them to make interest only monthly payment for the condo owners. But the act is not the transfer for five years, when the Wells family will take a new mortgage to pay for the house. 
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Wells said that he and his wife was lucky because the owners of condos were very motivated sellers, an elderly couple who had already moved into a retirement home and wanted to sell quickly. 

"We could easily walk away from the deal," said Wells. "But in light of what happened with the stock market and my IRA account, I prefer to put money into this condo, something you enjoy and can appreciate. " (source)