Some people who want to buy a second home for fun or to sell in the future will also look into getting a mortgage for that home. Many people wonder if it's even possible to get a new mortgage for another home. You can, that's the answer. But there are a few things you should know.
Mortgages and Homes You Already Own
When you apply for a loan, including a mortgage, the lender will look at your debt and credit score. If you already have a mortgage on one home, remember that every dollar you still owe on that mortgage counts as debt. This debt ratio is a very important number for the lender. That means that the interest rate will be much higher, even if you can handle making the payments on this mortgage just fine.
If the interest rate and payment plan are good for your plans and easy to handle, you should definitely think about getting that mortgage and second home. Due to the high cost of mortgages, it is hard for most people to be able to do something like this, but some people can do it.
You could also use the equity you already have in your home. If your current home has a lot of equity, you might want to look into a home equity loan or line of credit. These kinds of loans against the home are basically a second mortgage on your first home, and the interest rates aren't too high. If you have a lot of equity in your home, this is a highly recommended option.
It is possible to buy a second home and put a mortgage on it on top of your first mortgage. But in this case, it is especially important to look at all of your options, since it will be harder the second time and the interest rates will be higher. Still, more than 30% of the homes bought in the last three years were second homes, so it is possible.
