2nd Home is it better to get an equity Loan to purchase or a 1st mortgage?

We own our house fully No mortgage value approx $550k. We are thinking that we like to retire early to near the beach. Currently we found nice homes with land in that area for $175k. Is it better to get a home equity for the full cost of the Beach home plus any other small debit (approx $75k 2 cars and a timeshare) or continue to pay on the individual debits and add a Mortgage for the Beach house?

I am a mtg broker. I would do a fixed HELOC and combine all your debt into it. If you pay all your debt separate, you are paying interest on the cars, credit cards, etc which are NOT tax deductible. Your mtg debt is.

Congrats on having your home free and clear!

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Get a new mortgage for beach house. Recommend that you payoff the cars and timeshare as soon as possible without taking out the equity.

If you take out home equity you can only claim up to a $100k for a tax write off. So everything over a 100k would not count any way.

Retirement is around the corner.

Good Luck!

Rates are the same on primary and 2nd homes (as long as it's not near your primary...if so, some will consider it an investment property.)

Your options are: get a better tax break by taking out a first on your current home. Rates are better on a first mortgage than a second, but the closing costs will be higher. Use that money for the 2nd home.

or

Take out a loan for the 2nd home. Tax break isn't as good, but if something were to happen with your finances and you were unable to make house payments, your 2nd home would be foreclosed upon instead of your primary.

HELOC's are risky do to rates being on the increase and the fixed ones have higher rates...the closing costs are extremely low, though.

Have your loan consultant prepare numbers for all the scenarios, then take them to your accountant/tax preparer!

d

Get a first mortgage, defiantely.

By getting the equity loan, you are (as you know) putting your primary residence on the line for the loan. Should anything somehow come up and you (Heaven fobid) default, then you lose Your primary residence, and all of the hard work that went into paying it off has been completely lost, and you have nothing to show for it, except a downgrade in living quarters.

If you get the first mortgage, and something happens, then all you lose is your retirement home, and a bit of crediblity on your credit score.

I would suggest a 1st mortgage. You wouldn't want to risk your first home if you finances had a drastic change.

I'd love to help you out with this depending on the state you live in. I'd recommend against a HELOC you'd be better off with a 1st mortgage. Contact me at 877-LOAN-103 and ask for Josh if you are serious.