Best way to finance a cottage?

[tbulhead]

Best way to finance a cottage?

I'm looking to purchase a cottage on one of the bays.  What is the best way to finance it?  I was thinking a 30 year fixed mortgage.  I know someone who said to take out a home equity loan.  I'd hate to put my house up as collateral when the mortgage for the house will be paid off in a few years.  Any ideas or suggestions?

[ski-dooz]

Depends how old you are. If you can get a  clean bill of health physical there is a way to do it and add to your wealth. 

[guffins fisherman]

My wife and I decided to buy a cottage at probably the worst possible time, but we did it anyway. We had three young kids, two of which in daycare, and a home mortgage with a home equity line of credit on it already, student loans and a car payment. My advice: mortgage it. If you find it is killing you financially, sell it. Waterfront hardly ever goes down in value They ain't making no more. It always appreciates. Home equity is tricky, where a mortgage separates it from your actual dwelling if **** hits the fan financially. We have been in our summer/seasonal place six years now, and have not looked back once. Best decision I ever made. Good luck. I hope it works out for you.

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[Xxx]

If you have access to a credit union that's the rout I'd take, they usually have the best interest rates and no strings attached.

[Little Crappie]

As a real estate investor, I can add that home equity financing is very appealing if your know exactly how your financials span out. Some banks offer very low interest rates on HELOCs. You can always use a form of both. HELOC for down payment and finance the rest. But if your absolutely positive your going to have the cottage paid off in a short time, your likely to pay waaayyyy more in closing cost on a traditional mortgage than you would a HELOC. Most HELOCs are zero closing with maybe an appraisal fee and can generally be obtained within a week or 2, while a traditional mortgage is going to be in the thousands to close. It really just depends on your own personal situation.  

[HB2]

We bought one recently. Home equity line of credit ,but it was adjustable rate. So we decided to get a mortgage. What a nightmare. My credit score is outstanding. They kept telling me we were approved but need this or that . would give them what they wanted and they wanted more. Set up meeting with mortgage lady and wound up making her cry. After the mortgage fiasco , thats how it is now. 

 

Be prepared . But it was worth it in the long run . Consider renting it out when you are not using it .

[iceman05]

When I purchased my place in the islands two years ago , I borrowed money from my deferred comp plan. It's a low interest and you pay yourself back. Then I just took a small personal loan to cover the rest. That was the best option for me. Being at the lower end of 30 with many more years to work, I was a great option. But if retired or creeping up on it in 10yrs that may not be the best idea just a thought


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[MCF]

If you have a relationship with a credit union I would start there or also one of the smaller or regional banks.  Where I work is being bought out and has a long term relationship with a big bank.  Company is rock solid money maker no debt except for this buyout coming .  Big bank not real enthusiastic.  Small regional bank steps up so guess who is getting the day-to day banking as soon as the deal closes? 

[MooseKnuckle VI]

Line of credit on the house or any investments you might have. No mortgage means minimal closing costs. All you'd have is $500 for the attorney and 1% transfer tax. Easy peasy.

 

If you haven't found a place yet, my camps for sale on the classified page here on LOU. It's a Nice place, water front as well.

 

 

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[ski-dooz]

Line of credit on the house or any investments you might have. No mortgage means minimal closing costs. All you'd have is $500 for the attorney and 1% transfer tax. Easy peasy.
 
If you haven't found a place yet, my camps for sale on the classified page here on LOU. It's a Nice place, water front as well.
 
 
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[ski-dooz]

No wonder are county is in such bad shape. No one has any idea how to finance! Pay the bank that's what they want you all to do.


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[lost a lure]

Perhaps you can finance it for him!!!!

[MooseKnuckle VI]

No wonder are county is in such bad shape. No one has any idea how to finance! Pay the bank that's what they want you all to do.


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So you helped him out in what way by complaining? Guy asked a question, he got some different options from a few people. Isn't that the whole point of this forum?


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[tbulhead]

Would the tax benefits on the interest of a traditional fixed rate mortgage offset the advantages of a home equity loan? 

[MooseKnuckle VI]

Probably not but you'd have to figure it out to be sure. You might be able to deduct the heloc interest on your taxes anyway.

 

 

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[Little Crappie]

A second home would be a second home no matter if it's secured by a HELOC or traditional mortgage. Only starts to get tricky if you rent it out


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[Little Crappie]

HELOCs are generally adjustable rates, but cap out at like 12% depending on the institution and usually can only adjust with the market rate by a percent each year, so while interest rates are on the rise I don't predict anything astronomical in the next 15-20 years. So if the interest rate did rise... your tax benefit would actually be greater with a HELOC compared to the fixed and you didn't pay 5-6k in closing cost on top of a down payment


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[salmonite]

On ‎7‎/‎3‎/‎2017 at 6:22 PM, ski-dooz said:

No wonder are county is in such bad shape. No one has any idea how to finance! Pay the bank that's what they want you all to do.


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Are you going to let everyone know how getting a clean bill of health from a physician can buy a cottage? or just get mad that no one bit?

[salmonite]

21 hours ago, tbulhead said:

Would the tax benefits on the interest of a traditional fixed rate mortgage offset the advantages of a home equity loan? 

 

you can deduct home equity interest as well