Table of Contents
- What Are Netting Escrows & How Does It Work?: The Best Guide - January 2, 2024
- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About House Boat Loans
Buying a house boat can be an exquisite dream for some individuals. Buying a houseboat is very different from buying a home.
Though it could be very similar to buying a car, however, could be much more expensive compared to a vehicle.
This means you might require a huge amount of cash or adequate financing to purchase a house boat. In this post, we will learn about house boat loans in detail.
What Are House Boat Loans?
House boat loans are structured similarly to auto loans, with a single loan amount that you pay interest on for a set period.
You can avail of the loan for houseboats through banks, boat dealers, marine finance companies, or credit unions.
Low-cost boat loans are also available, but you’ll need to pay a large down payment, have low DTI and have good enough credit to qualify for such subprime houseboat financing.
Before investing in a house boat, consider whether the loan, along with security, maintenance, fuel costs, and insurance fits your budget.
What Are The Options To Get House Boat Loans?
Whether you’re considering houseboat financing, loan options include secured and unsecured loans.
Secured loans
A secured houseboat loan is secured by collateral. If you don’t repay the loan, the lender may repossess the collateral as a form of repayment.
Just like a mortgage, where the lender will foreclose on the house if you default on your mortgage payments.
In the case of a secured houseboat loan, your houseboat will act as collateral that the lender will repossess if you default on your loan payments to recover its loss.
Unsecured loans
In this type of loan, no asset is held as collateral. Since unsecured loans are not tied to particular collateral, lenders consider them risky as a result, the interest rate charged on unsecured loans is higher compared to secured loans.
But you may have flexible options in how you use an unsecured house boat financing compared to a secured one.
Home Equity Loan / Second Mortgage
If you are thinking of getting an unsecured loan to purchase your houseboat, a home equity loan or a second mortgage could be a better option.
The amount you borrow for buying the houseboat will use your house as collateral.
The interest rates on a home equity loan or a second mortgage would be lower than the unsecured loans.
On other hand, mortgage loans can be equally risky because if you default on the loan the lender might foreclose on your home.
Marine Financing Companies
There are loan brokers that work for financial services companies and have a similar role as that of a real estate agent.
With this option, your buyer’s and seller’s broker work together to help you negotiate and arrange finance options.
It’s a great option for first-time hose boat owners because having a professional on hand reduces stress and makes the process easier.
But of course, you have to pay for their skills – these loan brokers often charge 10% or more of the purchase price – and these loans also require a large down payment of 10-20%.
What Are The Things To Consider Before Applying For A House Boat Loan?
Before you get a loan for a houseboat, there are a few things you need to consider.
Your credit score
Some lenders will offer house boat loans to borrowers with low credit, but they may still require low DTI and down payment.
Just like a mortgage, if you have a low credit score, you will be offered a higher interest rate than if you have good credit.
Cost of owning a boat
When determining your boat budget, don’t forget to take into account expenses that exceed the monthly payment of your houseboat financing.
These daily expenses may include repairs, grooming, winterizing, fuel cost, boat insurance, slip fees, maintenance, taxes, and registration.
Marine Survey
When looking for a secured house boat loan, the value of the boat will be a factor in how much you can borrow.
If you are buying a used houseboat, you might want to consider getting a marine survey.
During this survey, the certified inspector will inspect the houseboat, engine, and trailer, describe the condition of the house boat, determine any necessary repairs, and determine whether it is safe to use.
Conclusion
Getting a house bout loan may mean going through a lot of challenges. From finding the right financing option to going through stringent qualifying guidelines depending on the lender and the type of houseboat you are planning to buy.
There are also lots of costs involved in buying a houseboat apart from your financing. Make sure you have all your finances planned before you decide to buy a houseboat.
