Your Smoky Mountain Investment Cabin: Financing Options
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There are two primary financing options available to a prospective cabin buyer. Your choice depends upon your personal goals and preferences. The first is a standard 15- to 30-year mortgage with a down payment of 10% to 20% where each payment is applied proportionally to principal and interest. The second option an 80% to 90% interest-only loan which you can obtain for 5 to 7 years at a fixed rate. With either option, if you choose 90% or more financing you will have to pay P.M.I. (Personal Mortgage Insurance) which adds approximately one-half percent to the loan rate.
Standard Mortgages
The typical investor plans to own their cabin for 3 to 7 years depending upon market conditions and personal considerations. With a standard 15- to 30-year mortgage you do increase your equity (ownership) position with each payment but the amount of each payment that goes to principal is minimal in the first 7 years. If you intend your cabin ownership to be long-term, a standard mortgage will be your likely choice.
Interest-Only Mortgages
If you plan to hold your cabin for 3 to 7 years, a fixed-rate interest-only mortgage may be your choice. The benefit to an investor is that this type of mortgage greatly reduces your initial investment which means you will have a higher return on investment when you sell. If you seek the lowest out-of-pocket initial investment and the highest % return at sale, this option should appeal to you.
Lender Referrals
You may choose to do your financing anywhere you feel comfortable. If you would like a referral to a lender experienced in cabin financing I have several excellent options available to you.
Will Quinn Website: www.willquinn.com Email: will@willquinn.com Phone: (865) 654-8006
For your free copy of the eBook The Insider's Guide to Buying a Second Home / Investment Cabin in the Smokies by Will Quinn, please email us: will@willquinn.com.
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