Does it make sense to purchase a second home with a home equity loan?

Asked by stimpy, Santa Rosa, CA Thu Oct 18, 2012

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William Matz, , Windsor, CA
Sat Oct 20, 2012
With the low fixed rates, better to use fixed rate loan than variable HELOC, most of which are based on prime.

Also, interest deductibility on HELOCs generally limited to $100,000 unless separate accounting for proceeds.
1 vote
Thanks for your reply. Considering the housing market CASH seems to be the best way to get into a Short Sale home where there are multiple offers. We are planning on a short term ownership to remodel and then resale. Given these plans would you recommend a fixed rate loan?
Flag Sun Oct 21, 2012
CRE Banker, Home Buyer, Santa Rosa, CA
Wed Jul 3, 2013
Don't do it. If you can't purchase second home for cash, then it is a poor idea. A second home is a luxury, with an implicit cost of 10% to 12% annually. You can easily pay for a number of overseas luxury trips compared to the annual cost of a lake home, or condo.
0 votes
Terry Bell, Agent, Santa Rosa, CA
Sun Dec 9, 2012
There's lots of different reasons for wanting to purchase a second home and that's why you need to sit down with a professional realtor to sort through your goals and options! First of all, congratulations for having equity! Whether considering a vacation home, an investment property or helping out the kids, it's all a fact finding mission that entails comparing numbers, and seeing if you are really willing and able to leave your comfort zone that you are now in. Best, Terry Bell, CPS Real Estate, Santa Rosa 707-292-5712
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Sun Dec 9, 2012
there are times that it does and others that it doesn't you haven't supplied enough information for anyone to offer you much better advice. You should not be seeking this type of advice online you should be consulting with your financial adviser or if you don't have one with someone you trust implicitly.
0 votes
Essex Mortga…, , Santa Rosa, CA
Sun Dec 9, 2012
If you are having trouble getting financing I am a private money lender we have what is known as a "Hard Money "loan with interest rates as low as 7.99% for up 48 months. You can own multiple properties and can provide you with funds in as little as 3 days.I have offices in both northern and southern California. Give me a call I would be happy to talk Jeffrey Martino Young (415) 572-8179
0 votes
Maria Cipoll…, Agent, Coral Springs, FL
Sun Dec 2, 2012
Your best option will be contacting a mortgage broker that can explore all your financial options and give a pre approval letter for the amount that you qualify. Lendersd are very strict right now and is very difficult to qualify for a second home mortgage loan.

Best of Luck,

Maria Cipollone

Century 21 Tenace
0 votes
Walter 'Skip'…, Agent, Brea, CA
Fri Oct 19, 2012
If it allows you to pay cash for the second home, it would be a big advantage in today's competitive market. Before deciding, be sure and check with your tax professional about the limits on the interest deduction for your HELOC.
Good luck,
0 votes
Morcos Azer, Agent, La Habra, CA
Thu Oct 18, 2012
Yes, if you qualify for the payments, and you are comfortable with the payments. If you financing the second home, some banks do not allow you to use a borrowed money for your downpaymet.
0 votes
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