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You are here: Home / Archives for Home Equity

Should You Use A Home Equity Loan To Buy A Vacation Home?

June 3, 2022 by Nosari Home Mortgage, Inc.

Should You Use A Home Equity Loan To Buy A Vacation Home?If you are looking for a way to diversify your investments while also making it easier to go on vacation, you may have thought about purchasing a vacation home. Saving up enough money for one house was already hard enough, so how are you going to save up money for a second house? If you have owned your primary residence for a while, you might be able to take out a home equity loan. Then, you could use this to purchase a vacation house.

How Does A Home Equity Loan Work?

A home equity loan allows you to borrow against the equity you have already accrued in your house. A home equity loan typically has a lower interest rate when compared to a personal loan because you use your house as collateral. If you have at least 20 percent equity built up in your home, you may be able to tap into this equity to use it as a down payment for a vacation home.

The process of applying for a home equity loan is similar to the process of applying for a mortgage. Then, you can pay back the home equity loan on your own schedule. You are only required to pay the interest every month, and you can work with the lender to figure out when you would like to repay the rest of the loan.

Consider Added Expenses With A Vacation Home

If you purchase a vacation house, some of your expenses might be higher. For example, your home insurance premium will probably be higher on your vacation house because there is a greater risk of something going wrong. You aren’t in the house all the time, so there is a greater risk of something going unnoticed. Furthermore, real estate taxes are typically higher on a vacation house than they are on a primary residence. You should have enough money put aside.

Consider Using A Home Equity Loan To Buy A Vacation House

A vacation house can be a great investment and a home equity loan can provide you with the flexibility you need to purchase one; however, you should consider all of the expenses that go along with a vacation home before deciding if you can afford one. 

 

Filed Under: Mortgage Tagged With: Home Equity, Mortgage, Vacation Home

Which Home Equity Loan Is The Best Option?

February 9, 2022 by Nosari Home Mortgage, Inc.

Which Home Equity Loan Is The Best Option?There are a number of significant advantages that come with homeownership, and one of the biggest advantages is the ability to take out a home equity loan. As homeowners pay off the mortgage, the amount of equity in the house increases. Homeowners can borrow against the equity in their house to fund other projects. For example, homeowners could borrow against home equity to complete a home renovation, pay medical expenses, or pay down student loans. The most common home equity loans include cash-out refinances, a traditional home equity loan, and a home equity line of credit. Which is the best option? 

A Cash-Out Refinance

The first option is called a cash-out refinance. Essentially, homeowners are taking out a loan for an amount that is greater than the current mortgage. Then, homeowners will keep the difference in the two loan values for their personal use. Homeowners essentially refinance the existing mortgage and extract additional equity. There is only one mortgage payment, and any interest on the new loan is tax-deductible. 

A Home Equity Loan

The next option is a traditional home equity loan. Homeowners borrow against the existing equity in the home, and homeowners create a second mortgage. There is a fixed interest rate on the second mortgage, and homeowners receive the money as a lump sum. It is not unusual for the interest rate on the second mortgage to be higher than the first mortgage.  Then, they have to pay off the second mortgage just like the first mortgage. 

A HELOC

Homeowners who are okay receiving the funds over time might be interested in a home equity line of credit, also known as a HELOC. The initial interest rate on a HELOC is often lower than the mortgage, but it can vary with time. Payments are often lower because homeowners only owe money if they actually use the line of credit. Interest is only charged on the outstanding balance.

Choose The Right Option

Homeowners need to understand the differences between these home equity loans to choose the best option for them. Some of them provide lump sums, some create multiple monthly payments, and some have more flexible payment terms. The features of each loan must be compared to the needs of the individual homeowner.

 

Filed Under: Mortgage Tagged With: HELOC, Home Equity, Mortgage

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Chris Nosari


Nosari Home Mortgage
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1001 Hwy 62 E
Mountain Home, AR 72653
Phone: 870-425-8351
Fax: 870-425-8353
NMLS: AR #136034 | MO Lic #2358
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