Best path to buy property. Home equity loan or mortage on the purchase?
Answers:
I would do a mtg on the purchase itself rather than risking the house where on earth my wife, kid, and I live in order to purchase something that we don't live contained by... just thinking worst case scenario, and I am trying to drop off risk
If payments could not be made at some point, would you rather lose the purchase (put up as collateral w/ the mortgage), or would you rather lose your home?
That depends on your goal. Home equity lines of credit or HELOCS are interest only and usually adjustable every month. The rates are low and due to the interest only, the payments are terribly low. However there is not much security what so ever. The rates contained by the mortgage industry are at a record low on all products so i would recommend a mortgage that fixed. HELOC rates look honest right now, but as the mortgage industry continues to raise the rates, you will see yours going up as okay. Be secure and grab a fixed, unless you just plan on being in the property for 2 or 3 years. In that crust get a 5 year fixed.
Paul T
Voyage Home Loans
Sacramento CA Source(s): Mortgage Specialist
depends on the type of property. If it isn't a primary residence, the lender may want a large down payment(25%-40%). If you have this, a mortgage would probably be simple.
If you own that kind of equity in your home consequently you could get a line of credit (watch flexible rates) to purchase it. You will own the environment and if you decide to sell it will clear the process easier. You also have the potential to lose your house if you default though.
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