Using your Equity to Finance New Property
I financed a home for a couple a few years ago in an area near San
Antonio, TX. Yesterday I received a call from them asking about a mortgage
to buy some land near a lake where they would one day build a cabin.
I told them they didn't want my money, and sent them on their way.
Why didn't I immediately take a loan application for a lot and construction
loan? More money for me, right? Easy. They didn't need it. But let me
explain.
When they bought their first home, they put about 40% down, so right
out of the gate they had some really decent equity in their property.
In addition, their home value has nearly doubled in four years time.
That's a lot of equity. In this case, about $600,000 in equity, which
I suggested they use instead of a loan to buy an undeveloped lot.
I've seen this on more than one occasion where clients simply look
right past their biggest asset when exploring financing options and
zoom right toward construction loans, lot loans or loans to buy a ski
condo. Rates for properties other than a primary residence are not only
higher, but they also require a minimum down payment. When you have
some equity in your home, look there first for financing. And you usually
have two distinct options.
A straight equity loan will typically be a second mortgage, assuming
there's a first mortgage already in place. Second mortgages will have
a slightly higher rate than a first, but not by much. And many times
there are few, if any, closing fees associated with second mortgages.
My client in San Antonio simply took out a 15-year fixed equity second
with his Credit Union for around 7.00%, then bought the lakefront property
outright. No mortgage, no closing costs, no worries.
Another option may be to refinance the primary mortgage to a lower
rate while pulling equity out of the home in one single swoop, called
a cash out refinance. It's fairly easy to decide which method works
best. If the new monthly payment on a cash out refinance is lower than
just adding the payment for a new second, then a cash out refinance
may be your best bet.
Article continued at http://realtytimes.com/rtcpages/20020222_equity.htm
Home Improvement
1st Choice
Leisure Buildings - Heavy Duty Workshops
Architectural Ironmongery
- Restoration hardware specialists. Wide range of door and window fixtures
and fittings in antique black iron, brass, hand-forged iron and satin
chrome.
Bathroom
Hardware Direct - High quality solid brass bath hardware in various
finishes, including towel bars, towel rings, robe hooks, soap dishes,
tissue holders, and more.
Best-Blinds
- Custom Window Blinds and treatments from all Major Brands at savings
up to 85%. Hunter Douglas, Levolor, Kirsch, and Comfortex all at Deep
Discounts.
Cabinet Hardware
Direct - High quality cabinet knobs and pulls, in solid brass, lead
crystal, wrought steel, porcelain, bronze, pewter, and more.
Chilipepper Appliance
- Speeds hot water from your water heater to your fixtures without running
water down the drain. Save time, water, and energy.
Designer Doors,
Inc - Corporate website for a wide collection of company owned websites,
including interior doors, door hardware, cabinet hardware, bath hardware,
hardwood moldings, stained glass, and more.
DoItYourself.com
Do
It Yourself Resources
Door Hardware
Direct - Wide variety of high quality door hardware and accessories.
Solid brass, lead crystal, porcelain, wrought steel, and bronze. Levers,
knobs, hinges, kickplates, and more.
Home Bar Plans Online
- Home bar construction plans to build a functional wet bar in your
house. The design incorprorates an under bar keg chiller to dispense
fresh draft beer or homebrew.
Home
Building Pitfalls - Avoid home builder rip-offs.
Home Improvement
- Learn how you can improve the quality around your house, Learn about
what you can do to your house for the holidays.
House
Plans - Architectural Designs features house plans from dozens of
prominent architects. Free modification estimates on all plans. Buy
your house plan from someone you can trust--we've been fulfilling dreams
for over 30 years.
Interior Doors
Direct - Hardwood interior doors manufactured at our plant and sold
direct to consumer or builder. Raised panel, flat panel, and divided
lite french doors.
Mailboxes
for snowy climates - How to protect your mailbox from snow plow
damage.
NapaKnobs.com
- The Fine Art of Hardware. Häfele knobs, handles and convenience
hardware.
New-Gutters.com
- Offers professional advice and tips to homeowners about all types
of gutters. Free quotes from local contractors are available to all
interested visitors in addition to a free copy of the Insider’s Guide
to Gutters. Guard Your House Today!
New-Siding.com
- Offers unbiased professional advice and tips to homeowners about all
types of siding. Free quotes from local contractors are available to
all interested visitors in addition to a free copy of the Insider’s
Guide to Siding. Imagine your exterior maintenance free!
Replacement-Window-Center.com
- Offers unbiased professional advice and tips to homeowners about all
types of replacement windows. Free quotes from local contractors are
available to all interested visitors in addition to a free copy of the
Insider’s Guide to Replacement Windows. Save Energy, Save Money!
Rick Garner Designer
- House plans and home design.
Roofing-Shingles-Contractor.com
- Offers unbiased professional advice about all types of roofing.
Free quotes from local contractors are available to all interested visitors
in addition to a free copy of the Insider’s Guide to Roofing. The right
roof, the right way!
Sunrooms-Patio-Rooms.com
- This website provides unbiased professional advice about sunrooms.
Free quotes from local contractors are available to all interested visitors
in addition to a free copy of the Insider’s Guide to Sunrooms. Light
Up Your Life Today!
Vinyl
Replacement Windows for Homes - An Invaluable Source of Consumer
Ratings, Reviews, & Comparisons on Wood, Aluminum & Vinyl Replacement
Windows for Homes. Request & Compare Prices from the Best Manufacturers.
| 
