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HELOC for Second Homes: Financing Your Dream Vacation Property

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May 7, 2023

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If you're in the market for a second home and are looking for ways to finance your purchase, a home equity line of credit (HELOC) may be a great option to consider. HELOCs allow homeowners to borrow against the equity they have built up in their primary residence, and use that money for a variety of purposes, including purchasing a second home.

What is a HELOC?

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A HELOC is a revolving line of credit that is secured by your home. This means that you can borrow against the equity you have in your home up to a certain limit, and then repay that amount over time. Unlike a traditional mortgage, which provides a lump sum payment upfront, a HELOC gives you access to funds on an as-needed basis.

How does a HELOC work for a second home?

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If you're interested in using a HELOC to purchase a second home, the process is relatively straightforward. You'll need to apply for a HELOC with your lender, just as you would with any other type of loan. The lender will evaluate your credit score, income, and the amount of equity you have in your primary residence to determine the amount of credit you qualify for.

Once you have a HELOC in place, you can use the funds to purchase your second home. You can also use the funds for other purposes related to your second home, such as making improvements or renovations. You'll be required to make payments on the outstanding balance of your HELOC each month, just as you would with any other type of loan.

What are the benefits of using a HELOC for a second home?

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There are several benefits to using a HELOC to finance the purchase of a second home. First, HELOCs typically offer lower interest rates than other types of loans, such as personal loans or credit cards. This can save you money on interest charges over the life of your loan.

Second, HELOCs offer a degree of flexibility that other types of loans do not. You can borrow only the amount you need, when you need it, and you only pay interest on the amount you borrow. This can help you manage your finances more effectively, and avoid taking on more debt than you need.

Finally, using a HELOC to purchase a second home can be a smart financial move because it allows you to take advantage of the equity you have built up in your primary residence. Instead of taking out a separate mortgage or other type of loan, you can leverage the equity in your home to finance your second home purchase.

If you're considering purchasing a second home and are looking for financing options, a HELOC may be worth considering. With a HELOC, you can borrow against the equity you have built up in your primary residence to finance your second home purchase. This can be a smart financial move that offers flexibility, low interest rates, and the ability to leverage your existing assets to achieve your goals.

Ready to unlock the value in your home and make smart financial decisions? Get a quote from Hitch today and experience the benefits of our digital HELOC platform. Our streamlined process, personalized approach, and commitment to your financial health make us the ideal choice for your home equity needs. Don't wait, take control of your finances with Hitch!

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Hitch, Inc. 23833672158 NW Toussaint Drive. Bend, Oregon 97703

1. Qualified applicants may borrow up to 95% of their home’s value. This does not apply to investment properties.2. HELOCs have a 10-year draw period. During the draw period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) the total of all accrued finance charges and other charges for the monthly billing cycle. During the draw period, the monthly minimum payments may not reduce the outstanding principal balance. During the repayment period, the borrower is required to make monthly minimum payments, which will equal the greater of (a) $100; or (b) 1/240th of the outstanding balance at the end of the draw period, plus all accrued finance charges and other fees, charges, and costs.The lender will calculate this amount by taking the outstanding Account Balance on the last day of the draw period and dividing it by 240 months and then adding any finance charge that accrues but remains unpaid during the monthly billing cycle plus any other fees, charges and costs to the fixed principal payment that is due. During the repayment period, the monthly minimum payments may not, to the extent permitted by law, fully repay the principal balance outstanding on the HELOC. At the end of the repayment period, the borrower must pay any remaining outstanding balance in one full payment.3. The time it takes to get cash is measured from the time the Lending Partner receives all documents requested from the applicant and assumes the applicant’s stated income, property and title information provided in the loan application matches the requested documents and any supporting information. Most borrowers get their cash on average in 21 days. The time period calculation to get cash is based on the first 4 months of 2024 loan funding's, assumes the funds are wired, excludes weekends, and excludes the government-mandated disclosure waiting period. The amount of time it takes to get cash will vary depending on the applicant’s respective financial circumstances and the Lending Partner’s current volume of applications. Closing costs can vary from 3.0 - 5.0%. An appraisal may be required to be completed on the property in some instances.4. Not all borrowers will meet the requirements necessary to qualify. Rates and terms are subject to change based on market conditions and borrower eligibility. This offer is subject to verification of borrower qualifications, property evaluations, income verification and credit approval. This is not a commitment to lend.5. The content provided is presented for information purposes only. This is not a The content provided is presented for information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. Other restrictions may apply.