Mortgage Update for Cabin Buyers

While lenders have tightened their qualifications for Second Home mortgages, such loans are still available at attractive rates and terms. Even if your primary reason for buying a cabin in the Smokies is as an investment, as long as you do not already own a similar type of property, your first such purchase is considered a Second Home by most lenders.

One of the most important criteria is your credit score. An average credit score (of the three primary credit scorers) of 680 can qualify you. An average score of 720 puts you in a premium position for an 80%, 30 year fixed mortgage with current rates hovering around 5%. With an average score of 740, 90% Second Home loans are also available through Wells Fargo at a similar rate to their 80% loans. The only catch to 90% loans is that you have to pay for Personal Mortgage Insurance until the loan balance equals 80% of the appraised value of the property. This can be accomplished through both paying down the balance and increased property value through appreciation. Prior to the problems experienced by the mortgage industry, P.M.I. averaged around 5.5% of the payment amount. The average P.M.I. is now around 13% so that must be taken into account when deciding the best mortgage for you.

With excellent opportunities available in this market and attractive mortgage rates for qualified buyers, now is an excellent time to pursue your Second Home dream in the Smoky Mountains.