Financing a Second Home: 2nd Mortgage Loan Versus Refinance

Second homes account for a total of 40% of all homes sold in America. According to a recent annual report of the National Association of Realtors (NAR), 27.7% of all homes purchased in 2005 were investment properties and 12.2% were vacation homes. About 65% of second home owners surveyed by the NAR said they consider their second home investment better than stocks, and 29% said it expects to acquire additional properties within two years. Cash-out refinancing and mortgage loans in the manner are typically homeowners finance home second installment, home improvements and home construction in the area of primary residences and second homes. The cash-out mortgage refinancing involves refinancing existing mortgage with a higher amount borrowed, which translates into a single loan and loan payments can be stretched over the long term. Cash-out refinance usually have lower interest rates than mortgages seconds, and can be a loan at a fixed rate or adjustable-rate mortgages (ARM). A second mortgage is a loan conditional on the same property. The two main types of mortgages are fixed rate second interest home equity loans and adjustable rate home equity lines of credit (HELOCs). A home loan is generally a lump sum loan and a HELOC is a revolving credit line, similar to a credit card, on which interest is paid only on loan. Second mortgages provide homeowners with options more flexible when it comes to spending and repayment. Depending on the needs of the home, they can borrow all or part of the capital of the house. Second mortgages also offer home owners the choice of a short term or long term loan. The decision to cash out equity with a mortgage refinancing or to request a second mortgage depends primarily on your needs and your ability to repay the loan again. If you have a low interest rate and conditions for an existing mortgage, you may consider a second mortgage to finance the deposit for the purchase of your property investment or buying a holiday home. Maria Ny is a respected free-lance writer from San Diego, California. He has written numerous articles covering a wide range of topics ranging from Real Estate Finance, Bankruptcy Reform, Credit Repair for Home refinancing. You can read more of her insightful articles online at Second Mortgage Nationwide. For more information and request quotes accurate interest rates for mortgage fixed rate home equity. You should analyze the benefits and risks of financing a second home mortgage. Article Source: http://EzineArticles.com/?expert=Maria_Ny