Mortgage Rates For March 19, 2024: How to Finance a Second Home

Once you’re happily established in your primary residence, you might consider purchasing a second home should your income allow for it. A second home is a fine investment if you’re considering inheritance (something of value to leave to your children), want a vacation home in an area you adore, or are considering a property to rent or use as an Airbnb.

However, you will face some limitations on purchasing a second home, and there are some things you should know. If you later end up in financial trouble, for example, you’ll be expected to sell the second home to meet bankruptcy requirements. Plus, there aren’t as many incentives for individual investors or families looking to buy second homes as there are for primary home buyers and first-time home buyers. 

However, a second home can still be a fantastic investment for your future and your portfolio. Let’s take a look at what’s involved in acquiring this type of asset. 

Today’s 30-year mortgage interest rates

The average daily mortgage interest rate for Tuesday, March 19, 2024 is 7.11% for a 30 year fixed rate. The rate stayed the same from yesterday and 0.31% from February 2024. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.

Today’s 15-year mortgage interest rates

The average daily mortgage interest rate for Tuesday, March 19, 2024 is 6.63% for a 15 year fixed rate. The rate fell 0.01% from yesterday and 0.45% from February 2024. This information is sourced daily from correspondent, retail, and wholesale lenders located in the United States.

The requirements for mortgaging a second home

Lenders will be more strict when you are looking to finance a second home. They’ll be looking for a higher credit score and will expect you have a higher percentage towards a down payment. You’ll also have to consider all other aspects of owning a second home – if it’s a rental, you’re still responsible for utilities and tax payments even if you don’t have an active tenant (or if you have one who isn’t paying). Additionally, second homes and investment properties are taxed differently, so you’ll need to be prepared to meet those financial obligations. 

Closing costs are also different when it comes to a second home. Expect your lender to require 2-5% for those fees. 

Your options could include the following when looking at the purchase of a second home:

• Home equity loan: This means you’re borrowing against your current asset; you’re using your equity to buy a new property. You get a lump sum to use towards the purchase of your next home.
• HELOC: This is a “home equity line of credit.” This is like a home equity loan, but the interest rate is variable. It’s a secured line of credit. 
• Cash-out: This means you’re refinancing your current home, but you’re essentially getting a different mortgage: one that is higher. That’s because you’re also financing a lump sum that you can use as a down payment on a second home. 

Is it an investment property or a true second home?

Whether the home is an investment property or a vacation home or second home used for your family affects not only how you’re taxed, but what kind of loan your lender might be interested in providing. The IRS considers an investment property a house you flip, intentional short or long-term rentals, and any home you rent out for at least two weeks in a year. 

If you’re interested in purchasing a second home, start by investigating the daily average interest rates on loans, then search for a property with the help of an agent well-versed in second homes or investment properties.