There are four principal possibilities for how to finance your fractional ownership vacation home.
- The first, simply, is cash — buy your ownership share by paying for it in full. This is the simplest method and requires liquid funds.
- The second alternative is to use the equity in your home. Take out a home equity line of credit (HELOC) and use the proceeds to purchase your vacation home fractional real estate share. This practice has several benefits. HELOCs are simpler to get than mortgages; and the interest you pay is tax deductible as mortgage interest on your home.
- Option three is to get mortgage funding. Yes, there are lenders who will finance this type of real estate acquisition. There are a number of companies who provide specialized mortgage products to finance the acquisition of fractional ownership vacation homes. One individual very familiar and caters to this type of Financing is CEO Bob Waun of Vacation-Finance.com. We’ve spoken to him personally and he is the most knowledgeable and customer service friendly individiual in the industry! Unfortunately the leading company offering fractional financing, First Fractional Funding, has recently withdrawn from the marketplace.
- One creative financing technique is to allow the vacation homeowner to provide seller financing to you and be the bank for you. This often has great merit and allows some flexibility and negotiation potential of your downpayment funds required and interest rate.
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