Financing Your Dreams

Now is the time to buy a houseboat

Published in the January 2018 Issue October 2018 Feature Heather Magda Serrano

With historically low rates, great loan program availability and the banks more aggressively approving loans, now would appear to be the primetime to consider financing your future houseboat.

Joey Gottfried, Newcoast Financial Services’ regional manager in Clearwater, Fla., has had is eye on the houseboat industry for the past 27 years.

“It’s a niche I’ve always specialized in,” said Gottfried, “and I cater to the houseboat market because houseboat buyers are great to work with.”

From Gottfried’s point of view, the houseboat industry has been on the rise, especially in the last two years. A significant part of the industry’s growing success is due to the fact that financing is now available for older boats.

Getting Older

After the infamous Great Recession, the banks were more on the tight-fisted side, and wouldn’t allow the financing of boats older than 10 years. During the same time, houseboat production dropped to an all-time low. Manufacturers weren’t making as many boats in the post-recession period because houseboat sales had dropped off significantly.

As a result, a large number of houseboats available for sale today are almost exclusively over 10 years old.

“Having financing for older boats going back as old as 30 years is really critical to sustain the industry and to provide a path for people to upgrade,” added Gottfried. “This is because if people can’t sell their older boats, it makes it much harder to upgrade.”

Now that financing older boats is an option, most of the sales come from boats older than 2008. Gottfried received an application today for a 1989 houseboat and he pointed out that if this same buyer had been trying to buy this boat five years ago, he wouldn’t have been able to make the purchase.

Now Is The Time

Rates are at the lowest levels they’ve ever been, and what’s more, they’ve been stable for the past 10 years. The sheer amount of loan programs and lenders make the prospect of buying your new dream boat more attractive and possible than ever. The fact that the banks started approving older houseboat financing shows their eagerness to approve loans.

“So far as the rates, terms and programs that are available, and how aggressive the banks are, all of those are aces right now,” said Gottfried. “It’s a really good time.”

Financing Process

As far as the process goes for financing your new houseboat, it’s pretty simple, so don’t let anybody scare you with gobbledygook terminology.

Keith Pierce, Community Trust Bank’s branch manager loan officer, makes a good point in saying, “Every financial institution is a little different.”

Even though rates and terms may vary, the general process of financing your houseboat stays just about the same. It goes something like this:

  1. First, call different financial institutions such as Newcoast Financial Services or Community Trust Bank to discuss rates and terms.
  2. Once you decide who to go with, you’ll typically have to fill out an application and turn it in. Usually, applications can be filled out over the computer and then emailed back. Gottfried said buyers generally hear back in a couple days.
  3. Then, once you receive approval, take your time looking at the terms and deciding if it’s right for you. If everything looks to be ship-shape, go ahead and move forward.
  4. Now you’re going to need a marine survey. Pierce explained that the survey is basically like a houseboat inspection and appraisal for the boat you plan on buying.
  5. Once you turn in your marine survey, along with any other documentation from the seller, your bank will prepare the loan documents. Once you’ve signed these documents, they will fund your houseboat loan.

Sounds pretty easy, doesn’t it? It will be if you make sure to keep track of a few personal things before financing your boat.

Keep In Mind

Pierce pointed out that once approved for the loan, it’s pretty much a walk in the park.

Isn’t that the truth. You will make your life a lot easier if you begin keeping track of things that could affect your eligibility for loans before you apply for one. A couple things that lenders will want to see are your credit score and your job history.

I know you’ve heard it all before, but I’ll say it again: Credit is a big deal. Banks want to see that you’ve already financed some larger-ticket items so they can trust you to make your future payments. Also, when financing houseboats, if there is more than one person applying for the loan, both parties will need to be approved individually, so it’s extremely important to keep track of and build your credit.

It would also be in your best interest to note that the average down payment for a houseboat is 20 percent, so don’t let that take you by surprise. It’s not like buying a car or a house where you only pay 5 or 10 percent down.

Then there’s job history. Pierce said lenders prefer customers to have at least two or three years at the same job and then many more years before that in the same line of work. Keep track of your paystubs and tax returns so that you can have them handy when they’re needed because you can be sure that your lender will ask to see them.

Unlike Real Estate

When it comes to financing houseboats, there’s a tendency to compare it to real estate, but Gottfried pointed out that this is not quite an accurate comparison because the houseboat financing industry is not regulated the same way the housing industry is. The housing industry comes with tons of regulations that don’t exist for houseboats. This slew of regulations makes the process of buying real estate far more expensive, tedious and time-consuming.

Gottfried said that total closing costs including UPS fees, Coast Guard documentation, processing, underwriting and applications is under $1,000. If you’ve ever bought a house, you know how much higher closing costs are. The difference is astronomical.

Financing your houseboat is also a fairly quick process. For real estate, you’re lucky to get through the process in 6 weeks, but for houseboats you can be done in as little as 7 to 10 days. However, the process usually takes an average of a couple of weeks because buyers like to take things in steps and not rush.

Closing Advice

Gottfried said the best advice he could give to first-time buyers would be to get on the phone with somebody who has experience because they can talk you through the process and explain what it takes to qualify. Houseboat financing is specialized and speaking to a specialist like Gottfried or Pierce would be the best course of action.

So what are you waiting for? Get on the phone with someone like Joey Gottfried or Keith Pierce today, and finance that houseboat you’ve been dreaming about!

 

 

Helpful Resources:

Community Trust Bank

270-789-5901

www.ctbi.com

 

Newcoast Financial Services

866-639-2627 

www.newcoast.com

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