Imagine coming home to a beautiful beach house in Kennebunkport or York, Maine. Or maybe you’d prefer a colorful cottage nestled in the heart of the Lakes Region. With an abundance of lakes, mountains, and oceanfront, there are many prime areas in Maine for a vacation home or a second home. If you’re considering a summer vacation home in Maine, you may have questions about how to finance a mortgage. In this blog, we’ll tackle the benefits of owning a summer home, how to budget for a second home mortgage, documentation needed, and more.
1. The Benefits of Owning a Summer Vacation Home In Maine
Maine is known as the vacationland for good reason. From rocky cliffs to sandy beaches, the diversity is spectacular and unspoiled. Residents and vacationers can enjoy all the vastness and tranquility that Maine offers. Vacation homes provide a space for creating memories with your family and loved ones. It also doubles as a place to enjoy your retirement years. If you decide to use your vacation home as a rental property, our trusted mortgage professionals are ready to help!
2. How to Determine Your Budget for a Vacation Home Mortgage
If you’re asking yourself: can I afford to buy a second home and, if so, how much home can I afford, you should consider the following:
- Size of your down payment
- Your debt-to-income ratio (DTI)
- Equity from a primary residence
A good rule of thumb is that your total DTI (including any debt owed on your primary and secondary residence) doesn’t exceed 45% of your income. For example, if your total monthly debts are $2,000/month and your gross monthly income is $7,000, you would have a DTI of approximately 28.5% ($2,000 / $7,000). Check out our helpful calculator tools for help determining your DTI, home budget, or mortgage payment.
3. Documentation Needed For A Vacation Home Mortgage
Properties must be suitable for year-round use and meet specific requirements. You’ll need to provide additional documentation to be pre-approved for a mortgage loan. Below is a general list of the items that you will need.
- Employer(s) name, address, and phone number for the past two years
- W-2s for the past two years
- Pay stubs covering wages for the most recent 30-day period
- If self-employed, personal and business tax returns (if applicable) for the most recent two years, signed and dated, with all schedules attached
- Previous two statements for all deposit accounts—checking, savings, investment, IRA, etc.
- If you rent, the landlord’s name and address for the past two years.
- Download our Pre-Approval Checklist for easy reference.
Check with one of our trusted mortgage professionals for more information about the pre-approval and mortgage loan process.
4. The Importance Of Working With A Lender Who Specializes In Maine Vacation Home Mortgages
If you want to purchase a second home, you can count on KFS Mortgage Company to provide reliable resources, mortgage loan guidance, and assistance throughout home-buying. Our experts will compare the pros and cons of each loan option. Contact KFS Mortgage Company today.