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Financing a 2nd Home with a Second Mortgage or Refinance
By Rebecca O'Connor
In a recent article, the National Association of Realtors noted that 40% of the homes and condos bought last year nationwide were by people who were buying second homes. "What we see now is a crossover between largely vacation- and investment-home owners, with people recognizing the value of those investments and pouring more assets into real estate," stated NAR President Thomas M. Stevens. With so many consumers buying investment property, maybe you are wondering about purchasing a second home or buying a vacation home yourself. Now how do you finance it?
As home values rise, many consumers find that they have equity available to them in their present homes. 28% of investors with an investment property mortgage used their primary residences to procure down payment funds and you may be able to do the same. Taking out an equity loan or second mortgage to do home improvements and increase the equity further is a great idea. However, you can take this idea one step further and utilize it for a down payment on a second home. Borrowers should consider adding a second mortgage if they need cash to start construction on your vacation home or to buy investment property.
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