Wouldn’t it be nice to have a home away from home? Maybe somewhere you could spend the colder days of winter in comfort and solitude?
It can be a lot of fun to have a little winter retreat of your own every year. But can you afford to buy a property outright just for that purpose?
Why not get a second mortgage loan to buy your dream vacation home! Below, we’ve discussed some of the different options for financing a winter vacation home.
What Is a Second Mortgage?
A second mortgage is a loan that’s taken out in addition to a borrower’s primary loan. It typically involves using the equity of your existing home to get another home loan. The money can then be used to buy an investment property or vacation home.
Second Mortgage Loan – Know Your Options
If you have your heart set on buying a vacation home, but don’t have the cash to do it, don’t worry. It’s still possible. You may be able to take out a second loan to finance your purchase.
Here are the two most popular options for taking a second mortgage loan:
- Home equity loan
- Home equity line of credit (HELOC)
Home Equity Loan
Home equity loans allow borrowers to take out money against the equity in the house. The loan amount is determined by the difference between the current market value and the due mortgage balance. When taking out a home equity loan, you can borrow a fixed amount of money. However, it’s important to know that you will be using your home as collateral. If you don’t pay the mortgage back on time, the lender may sell your primary house to settle the debt.
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) is different from a home equity loan. A HELOC acts like a credit card as it is a revolving source of funds. The benefit of this option is that it has low closing costs. Also, if you use a HELOC, you can borrow money anytime, and you will not have to pay interest on untapped funds.
When it comes to second mortgages, there is no one-size-fits all solution. The best option all depends on your situation. It’s important to understand the pros and cons of each option before making a decision. An experienced loan officer will be able to walk you through the process.
Apply for a Second Mortgage Loan Today
Are you interested in applying for a second mortgage loan? Contact Mortgage Solutions Financial today.