Why is buying a second home nearly impossible?

painthappy · 08-30-2012, 12:08 PM

I apologize in advance, just venting right now.

I'm in the process of (at least I thought I was) of doing more than just owning a boat in a marina on Lake Winnipesaukee. Don't get me wrong, I love my big sailboat, love the marina, but it's time to find a condo. Figured I wanted one with a water view and either on the beach or a 500' walk... I found some.

"Great!", I say to myself.

Call around about a second loan. Wells fargo, Merrimack Mortgage, etc... All want 20 to 25% down on the purchase price, not the value, on the purchase price.

So a $250,000 condo purchase, I would need ~ $60,000 minimum down on it.

No wonder places are taking a while to sell. I suppose my next step would be to look for a lender who would be willing to do it in house? Instead of big banks that are just going to resell it and have these ridiculous requirements.

I could see putting 10% down, as I'd rather not deplete my account 60 - 70k right now. Heck, at that point, I might as well just forget the bank and pay in cash... But I don't want to do that either. I have it tied up in investments that are actually making me money.

Told the wife that I'll probably just end up getting a bigger sailboat in the spring.

Anyhow, sorry for the rant. Fresh in my mind as I get off the phone. Good luck to those buying condos around Winni, and better luck to those selling.

AC2717 · 08-30-2012, 12:39 PM

you are right
i would try some local banks liek laconia savings bank or somethign like that, I have not had to do this in a while, but it would seem they would be more understanding of the situation and type of loan

if it were this way six years ago, i never would have been able to purchase our place, and look at that, I make my mortgage payment on time every month, what a thought

hig · 08-30-2012, 12:52 PM

20% is pretty standard for a second home unfortunately.

Try Meredith Village Saving Bank. We just closed with them and they were excellent all round.

AKADQ · 08-30-2012, 01:49 PM

Quote:

Originally Posted by painthappy

I apologize in advance, just venting right now.

I'm in the process of (at least I thought I was) of doing more than just owning a boat in a marina on Lake Winnipesaukee. Don't get me wrong, I love my big sailboat, love the marina, but it's time to find a condo. Figured I wanted one with a water view and either on the beach or a 500' walk... I found some.

"Great!", I say to myself.

Call around about a second loan. Wells fargo, Merrimack Mortgage, etc... All want 20 to 25% down on the purchase price, not the value, on the purchase price.

So a $250,000 condo purchase, I would need ~ $60,000 minimum down on it.

No wonder places are taking a while to sell. I suppose my next step would be to look for a lender who would be willing to do it in house? Instead of big banks that are just going to resell it and have these ridiculous requirements.

I could see putting 10% down, as I'd rather not deplete my account 60 - 70k right now. Heck, at that point, I might as well just forget the bank and pay in cash... But I don't want to do that either. I have it tied up in investments that are actually making me money.

Told the wife that I'll probably just end up getting a bigger sailboat in the spring.

Anyhow, sorry for the rant. Fresh in my mind as I get off the phone. Good luck to those buying condos around Winni, and better luck to those selling.

We just closed on a 2nd home with MVSB on the lake and was required to put 20% down, and I believe it to be a banking standard. Definitely try dealing with a local bank, they tend to be more understanding and are willing to work with local customers.

Also the way the real estate market is, make sure you are getting the best possible deal for that new home your looking at. I was patient and put an offer in on our home last year and it was refused by the home because they thought it was worth more. I waited til this spring because it hadn't sold over the winter and put in another offer. You could say he was more than anxious to sell this time and we ended up closing the deal back in May @ 42% below the assessed value. It was definately worth holding out and we saved $$$$$$ and got to enjoy the big lake this summer.

Mink Islander · 08-30-2012, 02:07 PM

One of the lessons learned from the real estate bubble is that folks that don't have skin in the game are more likely to default their mortgage and throw the keys on the table if their home's value declines dramatically. Especially if you are talking about a second home/condo/investment property. BTW, I am by no means suggesting you would do that.

Banks have been soaked enough by deadbeat borrowers who thought buying a home was a joint venture with the bank where they got 100% of the upside and the bank owned 90% to 100% of the downside. That's why the underwriting standards have shifted so dramatically. Simple as that. And a good thing if you think restoring the health of our banks is pretty fundamental to overall economic recovery.

BroadHopper · 08-30-2012, 02:20 PM

was standard and it is now.

During the RE boom before 2008, i remember banks will allow you to purchase a primary mortgage for a second home if you made the intent that you are going to sell your current home. I knew a number of folks that have two homes with seperate primary mortgage. I bet that created a mess.

fatlazyless · 08-30-2012, 02:21 PM

Doesn't Washington Mutual, the nation's fifth largest bank with a market cap of about 30-billion dollars, have a small local office in the Fitness Edge building opposite the Meredith roundabout.

Heard that Washington Mutual ...... aka WaMu .....was pretty easy with it's loaning out mortgage money because they do not hold onto the mortgages they write ..... WaMa just turns around and resells them on Wall St ...... or something like that ...... WaMu ..... sort of sounds like a name for a sailboat ....

P-3 Guy · 08-30-2012, 02:59 PM

Thank goodness some sanity has returned to the mortgage market.

A down payment based on the purchase price, not the value, is how it should be. Anyway, those two numbers ought to be pretty much one and the same, if you have a willing buyer and a willing seller, neither one of whom is being forced to go through with the deal and both of whom are fully informed of the market.

SIKSUKR · 08-30-2012, 03:50 PM

Hey wait, what's the name of the infommercial guy who would show you how to buy a house with no money down?

Don't see those anymore. Wonder why.

painthappy · 08-30-2012, 04:38 PM

Well, as luck would have it, my bank came through and sent me my pre-approval letter for a lion's share of the places I'm interested in.

Will bite the bullet and put the 20% down as the prices seem right in many areas.

Looking forward to it.

WeirsBeachBoater · 08-30-2012, 05:20 PM

Sent you an email.

RLW · 08-30-2012, 06:20 PM

hig, I just noticed that you are fairly new to posting on the forum and glad you have joined us. Have fun and enjoy the Winni Forum while making many new friends. I see that you are right into the swing of things logging in your first or second post.

secondcurve · 08-30-2012, 06:33 PM

Quote:

Originally Posted by painthappy

I apologize in advance, just venting right now.

I'm in the process of (at least I thought I was) of doing more than just owning a boat in a marina on Lake Winnipesaukee. Don't get me wrong, I love my big sailboat, love the marina, but it's time to find a condo. Figured I wanted one with a water view and either on the beach or a 500' walk... I found some.

"Great!", I say to myself.

Call around about a second loan. Wells fargo, Merrimack Mortgage, etc... All want 20 to 25% down on the purchase price, not the value, on the purchase price.

So a $250,000 condo purchase, I would need ~ $60,000 minimum down on it.

No wonder places are taking a while to sell. I suppose my next step would be to look for a lender who would be willing to do it in house? Instead of big banks that are just going to resell it and have these ridiculous requirements.

I could see putting 10% down, as I'd rather not deplete my account 60 - 70k right now. Heck, at that point, I might as well just forget the bank and pay in cash... But I don't want to do that either. I have it tied up in investments that are actually making me money.

Told the wife that I'll probably just end up getting a bigger sailboat in the spring.

Anyhow, sorry for the rant. Fresh in my mind as I get off the phone. Good luck to those buying condos around Winni, and better luck to those selling.

Get used to tight lending requirements as they are here to stay. While the Banks were partially to blame for the real estate mess we are in (politicians and homeowners are the other two major contributors) they have taken about 95% of the blame for the problem since the American public and arrogant politicians refuse to admit their culpability. Plus, faceless institutions like banks make easy targets. Thus, when Banks make new loans they must be 110% certain that they comply with government underwriting standards or hypocrites like Chris Dodd and Barney Frank (two of the biggest proponents of the GSEs and also the authors of flawed over the top banking regulations. How they were able to be on both ends of this mess still amazes me) are all over them with more rules and fines.

In any event, I wish you luck with your transaction.

NoBozo · 08-30-2012, 06:50 PM

Quote:

Originally Posted by secondcurve

Thus, when Banks make new loans they must be 110% certain that they comply with government underwriting standards or hypocrites like Chris Dodd and Barney Frank (two of the biggest proponents of the GSEs and also the authors of flawed over the top banking regulations. .

Let's not forget my favorite Rep:..Maxine Waters, (D) South Central, LA who stated.."This Program is Working Just Fine". (Look for the Youtube Video)

Implied; Anyone who speaks out against this program is RACIST. Case was Closed. NB

JDeere · 08-30-2012, 07:30 PM

Tough to consider a condo an investment.....more of a money pit if you ask me.

P-3 Guy · 08-30-2012, 07:46 PM

Quote:

Originally Posted by secondcurve

While the Banks were partially to blame for the real estate mess we are in (politicians and homeowners are the other two major contributors) they have taken about 95% of the blame for the problem since the American public and arrogant politicians refuse to admit their culpability.

Don't forget the Wall Street investment banks that bought, repackaged and sold crappy loans as if they were safe investments; the rating agencies that certified that these crappy loans were safe investmensts; the insurance companies (AIG, anyone?) that created credit default swaps so that the investment banks could protect themselves in the event that these loans that they knew were crappy went south; the mortgage companies that made up and marketed ever more risky loans (interest only, no money down, no doc); the speculators (not homeowners) who flipped homes at an increasingly frantic pace in order to make a quick buck; and the government regulators who were too stupid or lazy (or both) to figure out what was going on.

Mink Islander · 08-30-2012, 08:13 PM

I'm glad you took the plunge and are moving ahead with your purchase. Who wouldn't want to own a piece of the lakes region.... Even with 20 percent down! Congrats!

Rusty · 08-30-2012, 08:22 PM

Quote:

Originally Posted by secondcurve

Get used to tight lending requirements as they are here to stay. While the Banks were partially to blame for the real estate mess we are in (politicians and homeowners are the other two major contributors) they have taken about 95% of the blame for the problem since the American public and arrogant politicians refuse to admit their culpability. Plus, faceless institutions like banks make easy targets. Thus, when Banks make new loans they must be 110% certain that they comply with government underwriting standards or hypocrites like Chris Dodd and Barney Frank (two of the biggest proponents of the GSEs and also the authors of flawed over the top banking regulations. How they were able to be on both ends of this mess still amazes me) are all over them with more rules and fines.

In any event, I wish you luck with your transaction.

Read about Bush's first two Treasury Secretaries, Paul O'Neill and John Snow.
It might help you understand better where the Bush administration went wrong in the beginning.
Especially John Snow who in May 2004, it was revealed that Snow's brokers had bought $10 million of debt issued by Fannie Mae and Freddie Mac on the day and day after Snow was sworn into office as Treasury Secretary.
Snow was forced to resign when it was uncovered that Snow failed to pay income taxes on the $24 million of loan forgiveness he received while CEO of CSX Corporation.

08-30-2012, 12:08 PM	#1
painthappy Member Join Date: Apr 2011 Posts: 21 Thanks: 3 Thanked 10 Times in 3 Posts	Why is buying a second home nearly impossible? I apologize in advance, just venting right now. I'm in the process of (at least I thought I was) of doing more than just owning a boat in a marina on Lake Winnipesaukee. Don't get me wrong, I love my big sailboat, love the marina, but it's time to find a condo. Figured I wanted one with a water view and either on the beach or a 500' walk... I found some. "Great!", I say to myself. Call around about a second loan. Wells fargo, Merrimack Mortgage, etc... All want 20 to 25% down on the purchase price, not the value, on the purchase price. So a $250,000 condo purchase, I would need ~ $60,000 minimum down on it. No wonder places are taking a while to sell. I suppose my next step would be to look for a lender who would be willing to do it in house? Instead of big banks that are just going to resell it and have these ridiculous requirements. I could see putting 10% down, as I'd rather not deplete my account 60 - 70k right now. Heck, at that point, I might as well just forget the bank and pay in cash... But I don't want to do that either. I have it tied up in investments that are actually making me money. Told the wife that I'll probably just end up getting a bigger sailboat in the spring. Anyhow, sorry for the rant. Fresh in my mind as I get off the phone. Good luck to those buying condos around Winni, and better luck to those selling.

08-30-2012, 12:39 PM	#2
AC2717 Senior Member Join Date: Apr 2007 Location: Maynard, MA & Paugus Bay Posts: 2,523 Thanks: 747 Thanked 344 Times in 257 Posts	you are right i would try some local banks liek laconia savings bank or somethign like that, I have not had to do this in a while, but it would seem they would be more understanding of the situation and type of loan if it were this way six years ago, i never would have been able to purchase our place, and look at that, I make my mortgage payment on time every month, what a thought __________________ Capt. of the "No Worries"

08-30-2012, 02:07 PM	#5
Mink Islander Senior Member Join Date: Apr 2004 Posts: 753 Thanks: 59 Thanked 271 Times in 129 Posts	Skin in the game One of the lessons learned from the real estate bubble is that folks that don't have skin in the game are more likely to default their mortgage and throw the keys on the table if their home's value declines dramatically. Especially if you are talking about a second home/condo/investment property. BTW, I am by no means suggesting you would do that. Banks have been soaked enough by deadbeat borrowers who thought buying a home was a joint venture with the bank where they got 100% of the upside and the bank owned 90% to 100% of the downside. That's why the underwriting standards have shifted so dramatically. Simple as that. And a good thing if you think restoring the health of our banks is pretty fundamental to overall economic recovery.

08-30-2012, 02:20 PM	#6
BroadHopper Senior Member Join Date: Oct 2004 Location: Laconia NH Posts: 5,522 Thanks: 3,128 Thanked 1,090 Times in 784 Posts	20% down was standard and it is now. During the RE boom before 2008, i remember banks will allow you to purchase a primary mortgage for a second home if you made the intent that you are going to sell your current home. I knew a number of folks that have two homes with seperate primary mortgage. I bet that created a mess. __________________ Someday may never be an actual day.

08-30-2012, 02:21 PM	#7
fatlazyless Senior Member Join Date: Apr 2004 Posts: 8,547 Blog Entries: 1 Thanks: 297 Thanked 958 Times in 699 Posts	Doesn't Washington Mutual, the nation's fifth largest bank with a market cap of about 30-billion dollars, have a small local office in the Fitness Edge building opposite the Meredith roundabout. Heard that Washington Mutual ...... aka WaMu .....was pretty easy with it's loaning out mortgage money because they do not hold onto the mortgages they write ..... WaMa just turns around and resells them on Wall St ...... or something like that ...... WaMu ..... sort of sounds like a name for a sailboat .... __________________ ... down and out, liv'n that Walmart side of the lake!

08-30-2012, 12:52 PM	#3
hig Senior Member Join Date: Jul 2012 Posts: 58 Thanks: 41 Thanked 15 Times in 12 Posts	20% is pretty standard for a second home unfortunately. Try Meredith Village Saving Bank. We just closed with them and they were excellent all round.

The Following 6 Users Say Thank You to Mink Islander For This Useful Post:
DRH (08-31-2012), JDeere (08-30-2012), Jonas Pilot (08-30-2012), lakershaker (08-31-2012), LongBay (08-30-2012), NHlifer (09-04-2012)

08-30-2012, 02:59 PM	#8
P-3 Guy Senior Member Join Date: Apr 2011 Location: Under the former KNHZ bounce pattern Posts: 477 Thanks: 3 Thanked 207 Times in 110 Posts	Thank goodness some sanity has returned to the mortgage market. A down payment based on the purchase price, not the value, is how it should be. Anyway, those two numbers ought to be pretty much one and the same, if you have a willing buyer and a willing seller, neither one of whom is being forced to go through with the deal and both of whom are fully informed of the market.

08-30-2012, 03:50 PM	#9
SIKSUKR Senior Member Join Date: Apr 2004 Posts: 5,075 Thanks: 215 Thanked 903 Times in 509 Posts	Hey wait, what's the name of the infommercial guy who would show you how to buy a house with no money down? Don't see those anymore. Wonder why. __________________ SIKSUKR

08-30-2012, 04:38 PM	#10
painthappy Member Join Date: Apr 2011 Posts: 21 Thanks: 3 Thanked 10 Times in 3 Posts	Well, as luck would have it, my bank came through and sent me my pre-approval letter for a lion's share of the places I'm interested in. Will bite the bullet and put the 20% down as the prices seem right in many areas. Looking forward to it.

08-30-2012, 05:20 PM	#11
WeirsBeachBoater Senior Member Join Date: Apr 2004 Posts: 709 Blog Entries: 9 Thanks: 39 Thanked 148 Times in 65 Posts	Sent you an email.

08-30-2012, 06:20 PM	#12
RLW Senior Member Join Date: Jul 2002 Location: Alton Bay on the mountain by a lake Posts: 2,023 Thanks: 563 Thanked 444 Times in 311 Posts	Welcome *hig,* I just noticed that you are fairly new to posting on the forum and glad you have joined us. Have fun and enjoy the Winni Forum while making many new friends. I see that you are right into the swing of things logging in your first or second post. __________________ There is nothing better than living on Alton Mountain & our grand kids visits.

The Following 4 Users Say Thank You to secondcurve For This Useful Post:
Diver Vince (08-31-2012), DRH (08-31-2012), LongBay (08-30-2012), wolfegirl (09-06-2012)

08-30-2012, 07:30 PM	#15
JDeere Senior Member Join Date: Apr 2004 Posts: 295 Thanks: 74 Thanked 52 Times in 25 Posts	Tough to consider a condo an investment.....more of a money pit if you ask me.

The Following 2 Users Say Thank You to P-3 Guy For This Useful Post:
CateP (08-31-2012), Resident 2B (08-30-2012)

08-30-2012, 08:13 PM	#17
Mink Islander Senior Member Join Date: Apr 2004 Posts: 753 Thanks: 59 Thanked 271 Times in 129 Posts	Plenty of blame to go around. I'm glad you took the plunge and are moving ahead with your purchase. Who wouldn't want to own a piece of the lakes region.... Even with 20 percent down! Congrats!