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Building a second home from overseas

HSH.com

Q: My wife and I would like to build a home and purchase the land with a construction loan. We live overseas and work for the DoD, but return to the states for the summer. My college children will be living in the house throughout the year. I find because we live overseas that banks look at the purchase as a second home mortgage. We have about 20k to use for the purchase, any ideas?

A: Since you won't live in the home for more than a majority of the year, the property will be treated as a second home, which it is... and will be for tax purposes, too. You should be able to find financing for constructing a second home but should expect to pay more for the privilege -- higher fees and slightly higher interest rates than primary home mortgages are the norm. While it is probably a bit of a hardship, you will need to shop the local market. There may able be a chance for you in the FHA 'Kiddie Condo' program, too.

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