I find it always helpful to keep facts in mind about second homes. Sometime we forget reality. A recent report by the Mortgage Bankers Association, for example, reminded me that of the 43 million U.S. households headed by people 50-plus-- 15 percent, or 6.6 million--owned a second home, and did not pay for it with a new mortgage. The report says that those homes account for only 4 percent of mortgages.
How are 6 million people paying for these homes? That's interesting. Cash is a first answer. Cash could come from selling securities. Or cash could come from a home equity loan on the first home. Home equity loans would not be considered a mortgage in this case, since the seller would get cash directly. Another possibility for paying for the home would be not paying at all: if the second home passed from a previous generation, the new owners also would not need a mortgage. Last, and perhaps not so frequent, but certainly possible, is for private sellers to hold mortgages for the second home. That was probably more likely when interest rates were higher, but it's not impossible even today to find a willing seller who will finance the property for you.
It adds up to this: when you are ready to get your second home, there's more than one way to make it happen.
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