Your Options for Financing a Second Home

Your Options for Financing a Second Home Money Managing Tips
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WorldExecutivesDigest | Your Options for Financing a Second Home | There comes a time when a second home is a reasonable thing to buy. You might wonder how financing a second home is going to work, though.

If you plan to buy a second home, it’s important to get the financing figured out early to have a better idea of what you can afford. We’re going to look at how to purchase a second home in this article, giving you some insight into your options for financing.

Hopefully, the ideas below will give you some direction as you try to plot your course. Let’s get started.

Things to Consider When Financing A Second Home

The first thing to note about the mortgage on a second home is that the rates will be a little steeper in most cases. In your first mortgage, you might not have had as many financial pressures.

The lender looks at your debt to income ratio and gets an estimate of how difficult it will be for you to pay your bills. Depending on your risk of nonpayment, they adjust their rates to insulate themselves.

In this case, you’ve already got one mortgage payment that’s taking up space in your budget. Because another payment would increase your risk of nonpayment, lenders tend to bump the rates up a little bit when it comes to the second mortgage.

You might also be asked to put down a more significant down payment than you did for your first mortgage. Depending on the lender, that rate will be different. If you’re going through the same lender that you used for your first mortgage, though, just note that the second mortgage will require more money down.

Funding The Down-Payment

Browsing through potential second homes on, you might wonder how in the world you’ll be able to afford the down payment on a second home abroad.

One idea that many people gloss over is refinancing their first home. When you refinance, you get the value of the equity in your home in cash. If you’ve owned your home for a few years and made a few investments, that value might be more than enough for your downpayment.

Refinancing is an excellent way to come up with tens of thousands, if not hundreds of thousands of dollars, in a short amount of time.

Another positive thing about refinancing is that you’ll be able to adjust your current mortgage rates. If your credit has improved, you’ll almost certainly get a better deal on your mortgage than you did before.

That improved rate could affect how your next lender sees your credit, making it easier for them to give you a great interest rate on your second mortgage.

Need More Tips on How to Purchase a Second Home?

Financing a second home might seem like a stretch, but there’s a good chance that it’s possible. We’re here to help you with more ideas on ways to get your finances in order so you can buy a second home.

Explore our site for more budgeting tips, money management ideas, insight into financing options, and much more.

WorldExecutivesDigest | Your Options for Financing a Second Home