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30-Yr fixed 4.750 % 0.7 to 1
15-Yr fixed 3.750 % 0.7 to 1
5/1 ARM 3.125 % 0.7 to 1
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Vacation Homes – Why Refi?

Over the past few years rates on mortgages have fallen to very low levels which have made refinancing a mortgage or purchasing a new home a great financial decision. While rates on all loan products have been low, 15 year fixed mortgage rates have been even more affordable. While refinancing would be a great idea, the credit crunch has made it increasingly difficult to qualify for a mortgage refinances. Those looking to refinance a vacation home could have an even more difficult time. Luckily there are several ways a person could refinance their second home and receive favorable vacation home mortgage rates.

One way that a person could qualify for a refinance on their vacation home is to have plenty of equity in the home. While there are mortgage products still available for people with less than 10% equity in their primary residence, those looking to refinance their mortgage on their vacation home will need to have at least 20% equity in their home. To qualify for the best vacation home mortgage rates many banks will require a borrower to have closer to 30% equity. Unfortunately, since housing prices in popular vacation home markets such as Arizona and Florida have fallen so dramatically, refinancing into a new mortgage for many vacation home owners could require a significant equity infusion.

To obtain the best 15 year fixed mortgage rates on their mortgage refinance, a borrower will also have to prove that they have the financial ability to continue to make the mortgage payment. For many owners of second homes the poor economy has made it difficult to continue to afford the mortgage payment. To qualify for a refinance on their loan a borrower will need to prove that their total monthly housing debt, including their primary residence, does not exceed 33% of their gross monthly income. However, if a borrower does rent out their vacation residence from time to time they could use that income to offset their expenses and improve their debt-to-income calculation.

Most importantly, getting a good rate on a vacation home refinance will require having a good credit score. Banks place more emphasis on a borrower’s credit score than they ever did before. To qualify for a good rate on any vacation home mortgage product, a borrower will need to have a score of at least 700. Some banks may only provide a good rate to a person with a score above 740.