Owning a cabin in the Northwoods is a dream for many, but with today’s high interest rates, some buyers hesitate to take the leap. While rates may not be ideal, there are still smart strategies to make your cabin purchase a reality. With the right approach, financing your vacation home can be manageable—even in a high-rate environment. Here’s how to navigate your options and make a plan that works for you.

Know and Plan for What You Can Afford

The first step to house hunting is understanding your financing options, to understand exactly what you can afford and what makes sense for your situation. You can figure out your debt-to-income (DTI) ratio which considers all of your monthly expenses. A lower DTI ratio means more flexibility in your budget. Also consider your credit score and savings. High credit scores can help you secure a loan at a lower interest rate. Building up your savings is also a good idea so that you can afford the down payment and any unexpected costs that may arise.

Consider Your Mortgage Options

There are several options available when deciding how you want to pay your mortgage. Here are a few you may consider and talk to your broker about:

• Adjustable-rate mortgage: An adjustable-rate mortgage, or ARM, changes annually depending on the interest rates. However, there is an introductory period of several years where you will stay locked in at a lower interest rate than what’s available for 30-year fixed mortgages. An ARM usually makes the most sense if you don’t plan on owning your property for the long term.
• Fixed-rate mortgage with a shorter term: Mortgages with shorter terms, such as 10 or 20 years, will have lower interest rates than the typical 30-year mortgage. You will still be paying more monthly, but you will be paying less interest over time.
• Mortgage buydowns: A mortgage buydown allows you as the buyer to pay at a lower interest rate for the first few years after purchasing a home. Buydowns are funded by the seller and are often used as an incentive when trying to sell a property.

Use Local Lenders

Choosing a local lender rather than a large, national bank when taking out your loan can have benefits. Local lenders tend to be more flexible, especially if you have already built a relationship with them and may take your unique situation into consideration when it comes to your approval and terms. They may also provide lower interest rates, but this can vary greatly between lenders.

High interest rates don’t have to put your vacation home dreams on hold. By understanding your financial position, exploring mortgage options, and working with a trusted local lender, you can find a financing solution that fits your needs. If you’re ready to start your search, we’re here to help. Contact us today, and let’s find the perfect Northwoods getaway for you.