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Old 07-27-2007, 02:32 PM
Location: california
83 posts, read 316,651 times
Reputation: 94


I would like to buy a small vacation home in North Dakota, the price is under 15,000. Is there a bank or mortgage company that would give me such a small loan? I am employed by the County Of Los Angeles and my husband is a retired postal worker.
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Old 07-27-2007, 02:40 PM
Location: California
510 posts, read 2,890,342 times
Reputation: 383
Most retail lenders or mortgage brokerages unfortunately will not be interested in this type of loan, simply because they will not make any money on it.

You will have the best luck purchasing this home in one of two ways. First you can go with the secured mortgage loan route, or try a secured personal loan. The second way would be an unsecured loan.

This is all dependant on your credit of course. You will definitely have the most luck with banks, and I would recommend starting with your own personal bank. I would ask for a general loan officer, and talk to them about what they feel is best. I'm guessing a secured personal loan may be what they choose, because of the significantly low loan amount for a home. They however may be forced to go the mortgage route, at which point you may need a 5% downpayment. Most banks won't lend 100% on a 2nd home, but they will definitely lend more on a 2nd home than an investment home.

If you can not find a lender to do this loan, you can also consider doing a fixed rate 2nd mortgage, or a Home Equity line of credit on your current home. If possible, do the fixed rate 2nd as the rate will be lower, and you already know how much you need and plan to spend.

However, if you're doing a mortgage, a HELOC (home equity line of credit) may not be a bad idea for this reason. You may be able to get a much larger credit line than the $15,000 you need. The benefit to this is that you have access to money, just in case you need it. You only pay on what you borrow. As long as you're not an addicted home shopping network person, this can be a very beneficial safety valve to have.

The main differences between a fixed rate 2nd and a HELOC are as follows. A fixed rate 2nd almost always has a lower rate, and the interest rate will not adjust. A HELOC tends to have a higher rate, and your interest rate can adjust monthly (based on the prime index, currently at 8.25%). You can only get your initial draw on a fixed rate 2nd, and you would need to refinance it to get more money in the future. A HELOC you can draw and repay as many times as you want, up to your max credit limit of the line throughout the "draw" period. This is typically either 5 or 10 years.

Hope this helps... please mention any other questions should you have them.

(btw, you do know how cold it is in the Winter in ND right? I grew up in Montana, so I'm familiar with the harsh winters )

Good luck!
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Old 07-27-2007, 02:46 PM
Location: california
83 posts, read 316,651 times
Reputation: 94
I'm from North Dakota, I know it can be 40 below in the winter and 110 in the summer. But it is in a small town close to my 89 year old mother. Wish me luck
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