25 Nov How to finance a vacation home

HOW TO FINANCE A VACATION HOME

Second homes can be a good investment while at the same time giving you full control of your vacation spot. Housing prices are up by at least 5% since last year around this time. There are no guarantees of it being a good investment but here are a few things when it comes to how to finance a second home Utah that you’ll want to keep in mind

Three methods to finance a vacation home

If you’re considering shopping for a second home this year, there are a few specific approaches you may want to consider. It may be possible to not even have to take a loan out on the second home.

1. Get a HELOC or Home Equity Line of Credit on your primary residence

One of the more popular options for second home purchasers is a home equity line of credit.
If you have enough equity in your own home right now, you may want to consider to take out a home equity line of credit and buy your second home outright or use it for a down payment.

A HELOC may make sense when you already have a low fixed rate. Getting a line of credit does not affect your first loan. A homeowner may be able to tap into 100% of their home’s equity with a HELOC in some instances. There are a few benefits that these types of loans have. First, you can use as much or as little money from the approved line of credit as you need. Second, the interest charge is fully based on prime rate, which is very low right now. so your rate may be lower than what you’d pay on a conventional loan. Third, you may be able to avoid of the some of the closing cost expenses that you’d incur by refinancing your first loan whereas even “No Cost” options are available.

2. Get a mortgage on just on the second home

The guidelines for these types of properties allow for down payments as little as 10 percent, and credit recommendations can be lenient along with pricing as competitive as financing a primary residence. Rest assured Shilo and The Z Mortgage Team with access to more than 70 lenders will find a program that suits you best.

3. Get a cash-out refinance for your primary residence

All over the country home values are rising and many homeowners are in a great position to do a cash out refinance because of the increased equity.

For example, if you owe $80,000 on your mortgage, but your home is now worth $180,000 because of appreciation. You could “cash out” some of the equity by refinancing into a larger loan. If you have good credit you should be able to borrow as much as 80, 90, or even as high as 100 percentage of your home’s appraised value with a conventional mortgage. Different types of loans will have different cash out limits. For example, VA Loans may have access to 100 percent of the value of the home, while FHA loans permit up to 85 percent cash-out refinancing. In some cases borrowers can drop their monthly payment while at the same time taking cash out.

All in all, getting a bigger loan on your primary residence is one of the best ways to finance your second home.

If you have further questions or need to get prequalified don’t hesitate to contact Shilo and The Z Mortgage Team at z@shilozitting.com or 801.550.1796 I 435.632.6796

How to finance a vacation home