Is it smart to use home equity to buy a second home?

Homeowners have multiple ways to grow their wealth, from investing in the right assets to saving in the best accounts to refinancing when rates are advantageous. Those who have enjoyed the financial security of homeownership may also consider extending that support with a second home. Buying a second home can provide multiple financial advantages for homeowners if done smartly and comprehensively. However, securing the financing to complete the purchase may prove difficult.

Rates are lower than popular alternativesIt's not especially smart to use some popular credit alternatives right now, but especially not for major purchases like second homes. Credit card rates hover around 20% right now while personal loans are often in the double digits, too. Home equity and home equity line of credit rates, however, are just 8.66% and 8.98%, respectively. Because your home is used as collateral in these situations, lenders tend to offer more competitive rates.

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