Buying a recreational vehicle (a self-propelled vehicle with amenities found in a home) can be an exciting adventure that will ultimately lead to even more exciting adventures.
There are a number of good reasons to own one. They include:
Freedom of Movement: In an RV, you can go anywhere you choose – weather permitting, of course. You are not bound by airplane schedules or hotel availability. You are a self-contained traveler.
Family Togetherness: RVs are designed to be family friendly. Many grandparents bond with their grandchildren on trips they take in RVs. Because of their versatility, they can be driven to historic sites and amusement centers both.
Communing with Nature: There is a lot of beautiful country to be seen in the United States, and an RV affords its owners that opportunity in transportation that is familiar and handy. National and state parks are well equipped to handle visitors who arrive by recreational vehicles.
Pets Come Along: With an RV, pets don’t have to spend your vacation boarded in a kennel. Instead, they can come along and be part of the family. And, because RVs are climate controlled, they can stay in them while the family is out sightseeing – something they can’t usually do in a passenger car or SUV.
RVs are Versatile: Not all RVs are simply bedrooms on wheels. They can also be built to haul jet skis, bicycles, all-terrain vehicles and motorcycles. They can also tow your automobile, to make local travel easier when you arrive at your destination. The more advanced models have telescoping walls and ceilings to allow increased square footage.
A Transition to Retirement: An RV gives the retiree options. It can function as a second home or, if downsizing is in order when retirement comes, it can be the primary residence.
Yet RVs do not come cheaply. Financing one in a traditional manner will invariably involve a huge monthly payment. There is a solution, however. A very popular and common way to bankroll the large sums that recreational vehicles command is to use the equity you’ve built up in your home for that purpose.
Because you have diligently paid your mortgage down, you have empowered yourself to make lifestyle choices you might not otherwise have. Many people who are nearing retirement either already have or will soon have their homes paid off in full. This good fortune affords these people all kinds of spending clout.
Consider the advantages that using a home equity loan to buy your RV can afford you:
Better Negotiating Power: If you have enough equity in your home, you can essentially pay the dealer cash for your RV. That can give you a lot of negotiating capacity.
Avoiding High Interest Rates: Because you are putting your home up as collateral, you are getting the lowest possible interest rate on your home equity loan. If you simply walk onto the RV lot to make your purchase and finance it through the dealer, you’re going to be paying off your vehicle at a considerably higher rate.
Tax Deductions: Your home equity loan can be tax deductible1 - please consult your tax advisor regarding deductibility of interest. A traditional RV loan is not.
1. Home Equity: APR is Annual Percentage Rate. Loans Subject to approval. Combined Loan-to-Value (CLTV) cannot exceed 80% of your home’s value. Additional terms, conditions, and restrictions may apply. Amplify Membership and Property Insurance required.
HELOC: The home equity line of credit Annual Percentage Rate (APR) is variable and is based on the highest Prime Rate published each month-end in The Wall Street Journal Money Rates Table (the "Index"), plus a margin. The current Index is 3.50%. Maximum APR is 17.90%. This Account has a Draw Period of 10 years, after which you will be required to repay any amounts within a 10-year term. Interest on your HELOC may be tax-deductible – please consult your tax advisor for details. Property Insurance, including flood insurance as needed, is required. Loans Subject to approval. Additional terms, conditions, and restrictions may apply. Amplify Membership required. Consult the CFPB's Home Equity Line of Credit booklet as well as the Early HELOC Disclosure for more information.
Under Texas law, the maximum you can borrow with a HELOC is 50% of the fair market value of your home, as long as the combined loan-to-value does not exceed 80% in cases where there is an existing first lien mortgage on the home. A minimum draw amount of $4000 is required for each advance after the initial $10,000 advance at origination.