Financing to Fit Your Needs

Whether it’s a year-round home or a seasonal retreat, the right financing and insurance are must-haves.

By Laura Kanzler

Whether it’s a year-round primary residence or an idyllic summer escape, simply getting and financing that dream house on Cape Cod can present challenges. Homes on the Cape can differ from small cottages with no heating systems to expansive compounds with guesthouses. It is important to keep in mind the overall reason for the home, since this will form the basis of your financing decision.

Ann Hart

Photo by Ann Hart; courtesy of Cape Cod Five

Whether your goal is to buy a new home or to refinance your current Cape Cod Property, now is the time due to a combination of historically low interest rates and lower home prices, according to David Brennan, senior vice president and chief residential and consumer lending officer for Cape Cod Five Cents Savings Bank. “There are two different types of borrowers [on Cape Cod],” says Brennan. “Folks come here to buy either a primary residence or they come here to buy a second home, which can sometimes be a retirement home.” Current interest rates are sure to appeal to either snowbirds or year-rounders.

Budget goals and financial plans

Savvy buyers should take a look at their personal finances and budget goals. “I ask clients if they’ve done a budget,” says Dante DiMassa, vice president and director of residential lending at the Bank of Cape Cod. “We sit down and communicate needs and goals clearly to be sure they’re comfortable with a monthly mortgage payment amount.” At the end of the day, being comfortable with the numbers goes a long way toward making the right investment.

Your budget goals should also be reflected in both your monthly mortgage plans and your overall financial plans. That means you need to consider the length of time you wish to live in and own that property. Do you want to buy a starter home and move in three years, or is this a long-term dream home for family and possibly your golden years?

Rate options

Property type and budget goals should be your guides when looking at rate options. Terms like fixed-rate, 5/1, and 7/1 can sound confusing, but each rate option speaks to a different financial goal. A fixed rate mortgage locks in a price for a set amount of time, while adjustable rate mortgages, such as a 5/1, locks in a rate for a period of time and then it adjusts after that point.

“Rates today are risk-based,” says DiMassa. “What you’re doing – such as buying a second home or an investment property – affects your rate.” Both DiMassa and Brennan recommend sitting down with a knowledgeable bank lender and being specific about your goals. For example, if you plan on buying a primary home and living there for more than five years, a 30-year fixed rate loan will likely be the best option. But, if you’re looking toward retirement, “a variable rate loan may better fit your financial picture, especially if you plan on selling your primary home in the future,” says Brennan.

Insurance – the key to value and equity

Much like the homework required to properly finance your property, there are some unique things to consider when it comes to insuring your Cape Cod home.

“Coastal home owners first need to choose an insurance carrier that has an A.M. Best key financial rating of A- [or higher],” says David Rose, vice president of Dowling & O’Neil Insurance Company. “It’s often overlooked.” A.M. Best provides an independent rating system for the financial stability of insurance companies; a high rating means your insurer will be more likely or better able to fulfill the terms of your policy should the unthinkable occur.

It is important to consider your home property type, its location, and your specific needs and financial goals. These all impact your insurance options. For instance, Rose notes, “if you’re going to have a home in a coastal area and rent it out to others, that impacts your pricing.” Other things that may impact your insurance costs include the coast-specific safety items such as hurricane-secure windows, hurricane shutters, and raised foundations.

Whether you are refinancing your primary house or purchasing a summer home, working with lenders and insurers right on Cape Cod may be your safest and most equitable option. Local experts like Brennan, DiMassa, and Rose all point out that having firsthand knowledge of the region can help any buyer or refinancer navigate the lending and insuring landscape with ease.

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