Vacation Finance, America's First-Second Home Lender innovates fractional home loans again...
Birmingham, MI (PRWEB) June 27, 2006 -- The popularity of fractional vacation homes and condominiums is growing quickly in America, but the financing options are limited.
Fractional ownership poses significant challenges for conventional mortgage lenders. First, there is no existing secondary market for these loans, as Fannie Mae and Freddie Mac do not currently purchase fractional interest mortgages. Next, there are challenges in defining the collateral - as fractional interests share title and designate an owner time/use rights.
Fractional property ownership is in no way a new concept, anywhere vacation properties exist, fractional interests may be popular. "Owners don't want a second home for 365 days a year, so why pay for the time it sits vacant" said J.H. Heck, VP of Fractional Lending at Vacation Finance www.vacation-finance.com "our clients understand the value of their money and want to pay for only the time they will use in their vacation homes. They often purchase multiple fractional interest in multiple resort locations."
Fractional interests are often split in 1/4 (1 week a month, 12 weeks a year), 1/8 (1 week every other month - 6 weeks a year), or 1/10 shares. "Most people don't get more than 3 weeks of vacation time, so owning more than 25% of a luxury vacation property is overkill and cost prohibitive" agreed Bob Waun, CEO of Vacation Finance, "with fractional, a second and third residence becomes a justifiable (and lower) expense."
As majority of America's 76 million Baby Boomers near retirement age over the next 15 years, the sales of fractional real estate interest is expected to grow significantly. Even wealthy boomers are finding competiton for the best "rare air" destination resort real estate is priced outside their reach. Fractional interests help buyers afford the unaffordable at a fraction of the cost.
Vacation Finance launches an expanded intiative to offer more fractional home and condo loans at lower rates and LTV ratios up to 80%, a 5% improvement. The expanded criteria also includes easier income and credit qualifications than in their previous loan programs, and is another example of the firms commitment to this market niche.
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