Posted on: 6 November 2018
If you are dreaming of buying a vacation home but do not know if you can get approved for a loan, because you already have a loan on the house you live in at this time, you might still be able to get a loan or borrow some money so that you can buy a vacation home. If you are in this position, there are several ways people find ways to borrow money to buy vacation homes, even if they already own homes that they plan on keeping.
Take an Equity Loan
The first option some people use is borrowing money through their existing loans through the form of an equity loan. An equity loan is based on the amount of equity you have in your house. Therefore, if you have a lot of equity, you might have enough that you could borrow it to purchase a vacation home. If you use this option, you would still have to pay your regular mortgage payment, plus you would have to pay the equity loan on the first home you have. You would not need a second mortgage, though, which means you could pay cash for the vacation home.
Borrow Money Through Another Loan
The other option some people use when buying a vacation home is applying for a mortgage to buy one. If you are approved for this option, you would have two mortgages – one on each house. To qualify for a second loan like this, you would have to be in great financial shape, because you would have to prove several things:
- That you have enough income coming in each month to pay the mortgage payments and all the related expenses for both homes you would own.
- That you do not have too much debt to the point where your income would not cover all your expenses.
If you can prove these two things, and if you have great credit, a lender may approve you for a loan to buy a vacation home. If you happen to have enough cash in the bank to pay for a vacation home, you would not have to worry about using either of these two options.
Buying a second home to use for vacation purposes is a great idea if you can afford it and if you long to travel a lot. To learn more about loans for vacation homes, contact your local home mortgage services or lender today.Share