More and more people are buying vacation homes, but fewer are getting a mortgage to do so, according to SmartMoney.
Approximately 42 percent of vacation-home buyers bought their getaways with cash, according to the National Association of Realtors. That's an increase of 6 percent from 2010. Median sales prices for vacation homes dropped 19 percent in 2011 to $121,300. This is partly due to an oversupply of vacation homes.
Homeowners tend to prefer cash offers over mortgages because there's more certainty with cash, Keith Gumbinger, vice president at HSH Associates, a data firm, told SmartMoney. Cash sales are also faster and more convenient.
Lenders are getting stricter and pickier with whom they give loans to, according to the article. But mortgages on second homes are even harder to obtain as standards become increasingly tight. Banks want bigger down payments and have strict limits on the amount of debt vacation-home buyers can accumulate.
Approximately 55 percent of vacation-home purchasers in 2011 said getting a mortgage was more difficult than they expected, according the NAR. Buyers can typically get a mortgage on a primary home with a down payment of 10 percent, but that number can be as high as 20 to 25 percent for a vacation home, Gumbinger told SmartMoney.
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