Ask the Expert How to Pre-Qualify for Vacation and Investment Homes

Written by Kevin Onizuk


Askrepparttar Expert How to Pre-Qualify for Vacation and Investment Homes

Kevin Onizuk is a partner in Breakwater Mortgage and has been inrepparttar 138006 lending business sincerepparttar 138007 mid-nineties. In this interview, he details how to pre-qualify for a second mortgage.

Q.What isrepparttar 138008 first factor a consumer should consider before deciding to purchase a second home?

A.The first question to ask yourself is can you actually afford it? The lender will wantrepparttar 138009 buyer to have a high enough income each month to pay for bothrepparttar 138010 primary and secondary housing payments. The lender will also expectrepparttar 138011 buyer to have cash in reserve. Normally three to six months timesrepparttar 138012 mortgage is expected to be in savings as insurance against any emergencies or economic hardships.

Q.What isrepparttar 138013 difference between purchasing a primary residence and a second home?

A.When buying a second home for personal or investment purposesrepparttar 138014 financial picture is slightly altered. The lender will require a larger down payment because they believe a loan on a second home is a higher risk. Lenders feel it is easier for buyers to walk away from a vacation home or rental property than it is fromrepparttar 138015 primary residence. Since lenders believe second homes do not fosterrepparttar 138016 same amount of owner commitmentrepparttar 138017 loans are considered more of a gamble.

Q.Does owning a second home offer any tax advantages?

A.Tax deductibility can be tricky. Always consult your tax advisor. Mortgage interest and real estate taxes are usually deductible, but you must live in your second property for part ofrepparttar 138018 year. If you choose to rent all rental income must be reported. Remember, any money spent to maintainrepparttar 138019 properties are deductible. In summary, property taxes, mortgage interest, insurance, repairs, utilities, cleaning and upkeep are all expenses. Keep careful records of all money spent on these types of endeavors.

Q.Are there any benefits to getting a home equity loan?

A.A home equity loan usesrepparttar 138020 equity from your primary residence to createrepparttar 138021 loan on a second home or investment property. It is a simpler loan to get because fewer questions are asked byrepparttar 138022 lender. The interest is also tax deductible. The only problem is that inrepparttar 138023 event you cannot make a payment you lose your primary residence. As I mentioned before, lenders find buyers in fear of losing their first home are less risky and will have a more difficult time walking away. There are benefits but inrepparttar 138024 long term a home equity loan could cost you more than you ever imagined. Think clearly aboutrepparttar 138025 possible consequences and be prepared make informed investment choices. A good loan officer will provide advice throughoutrepparttar 138026 process. Home buyers who do not wish to obtain a home equity loan may want to consider a no doc or stated income loan.

Get Rich With Mobile Homes

Written by Steve Gillman


Doesrepparttar myth that mobile homes depreciate in value keep you from investing in them? Well, they do lose value in a park, on a rented lot. Mobile homes with real estate, however, are an entirely different investment.

My mobile home doubled in value inrepparttar 138005 twelve years I lived in it. The home deteriorated a little (don't all houses?), butrepparttar 138006 value ofrepparttar 138007 land continued to rise. Also, by renting rooms, I took in far more money from my home than it originally cost, and I was living in it!

Forget your prejudices and look atrepparttar 138008 numbers. In this town, for example, a two bedroom house rents for $800/month, and costs about $120,000. A mobile home gets $500/month, but you can buy one on real estate for $50,000 or less. The cash-on-cash return on investment is obviously higher with mobile homes.

What aboutrepparttar 138009 long term return from appreciation? House rentals here typically have negative cash flow, while mobile home rentals at least break even. Investors prefer houses anyhow, believing they'll build equity faster, but is that true?

Faster Equity With Mobile Homes

Buy a house for $120,00. Put $20,000 down, and you'll have a $100,000 mortgage loan. Amortised over 30 years at 6% interest, you'll have a payment of $599.60. Ofrepparttar 138010 first payment, $500 will go towards interest, $99.60 towards principal. In other words, you only built equity of $99.60. I'm ignoring appreciation, but only forrepparttar 138011 moment.

Second scenario: Find a nice mobile home for sale, and borrow only $30,000, at 8% interest, amortised over 10 years. Noterepparttar 138012 higher interest - this is alwaysrepparttar 138013 case with "factory built home mortgages." The shorter term is normal too, so you'll be done with payments in 10 years instead of 30.

Now, despite higher interest and a shorter term,repparttar 138014 payment will be only $363.99. The first month, $200 will go towards interest. That meansrepparttar 138015 other $163.99 goes towards principal. You bought more house (built more equity) in this scenario.

A mobile home on land might appreciate more slowly thanrepparttar 138016 "regular" house, but faster loan pay-down covers this factor. Pay less per month and build more equity! Don't expect your real estate agent to tell you this. Don't expect him to even agree with me after you explain it. I sold real estate years ago, and math skills were not part ofrepparttar 138017 licensing requirements.

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