Before I take some wrath of others, i want to make sure that my comments below are not seen as being judemental towards anyone or condescending as they may be read if taken out of context. Given the economic climate and what many families have been through with real estate recently, I would hate to see anyone's dream shattered. It is relatively easy to "buy" property in a dream destination, but selling is never a certainty (price or timing), especially in this climate. It would be terrible to see someone take out additional debt on a primary residence with a low equity position and ever have to be in a position to sell their vacation home . . . Only to find out it is not that easy to do . . . Having to take a low price and retain the debtload back home on that property would be terrible.
It would have been easier to simply delet my post, but I thought it just be helpfulto some considering taking the plunge to fully consider the risks. Again, the comments are purely to help.
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IMO only, it seems having 20% equity in your primary residence and trying to fund a vacation property through any debt means (home equity line or international mortgage) is a very risky proposition . . . not trying to dish out financial advice, just trying to protect you from any potential bad situation in the future where one or both of your properties is up for grabs . . . Michael
Really good point Michael. Every year when we visit Aruba I dream of owning a second home there, and even though we are closer to retirement age than we admit reality does set in at some point. We have made friends with many of the staff at the Surf and Ocean Clubs over the years. We often discuss the possibiltity of buying a second home in Aruba and they all caution us as to the market conditions there. Supposedly the demand has picked up a bit as our economy slowly struggles to improve, but selling an expensive home in Aruba is not an easy proposition. This is probably why the Aruba banks demand more of a down payment as they do not want to get stuck with owning the homes like the banks in the U.S.
Thanks Andrea and jeffnev . . . I was concerned my comments would be read or taken poorly - there are many options available to live out that dream on our happy island . . . homeownership, while rewarding, is a significant commitment . . . and not just financially.
Andrea, you are spot on - this is an excellent online community and I am delighted to contribute wherever possible.
Although I just recently bought a home on the island, I still check the real estate sites regularly. I'm still interested in what's selling, what isn't, and if we still got a good deal! It seems as though the majority of the homes being sold are modest and at the lower end of the spectrum selling for between $150,000 and $300,000. This is really no surprise due the economy.
We sold our home in Aruba last year, I built it and sold it within a year. We were one of the lucky ones as many homes are on the market for years and never sell. We had enough equity in our home back in Canada to fund the building of the house fully. We would never get a loan in Aruba, their rates are very high and you will NEVER PAY off the loan, speak to some local people and they will confirm this. The only way and best way is to get a home equity loan (i understand you are not in the position to do that) or get a loan in USA from bank there but that will be very very difficult because they will not be able to appraise the house in Aruba in order for them to lend you the money. Please rethink this and be sure you get all the correct info. Good luck
My home in Aruba, Casa Koyari, my second home, Casa Del Mar, followed by Arashi and Baby Beaches!
Try PNC bank, formerly National City. While I did have the equity to take out a loan against my house in the states, they were great to work with and specialize in home equily lines of credit. They have me a line of creit at 3% so it's almost like taking an interest-free loan. You also have the option of paying just the interest for about 10 yrs. Aruban banks are a non-option with teh large down payment requirements and even if you had it, your interest rates woudl be close to 10%....