If you own a vacation home, chances are you can afford the insurance you need to protect it.
But in the real world, your policy may not cover 100 percent of disaster damage. And then there are those deductibles.
So how do you get the money you need to repair any storm damage?
By far, withdrawing from a savings account is the easiest option -- no forms, no penalties and no interest.
And frankly, at today's rates, you're probably not missing much in the way of interest if you're taking money out of the typical savings account. You can even set up a repayment plan to yourself and have that money automatically redeposited to your savings account.
Typically, there's only one downside: You don't have that savings if you suddenly need it for something else.
If you want to use a home equity line of credit, or HELOC, you have two options. You can get a line of credit on your primary residence. Or, if you already have a HELOC on your now-damaged vacation home, you may still be able to access it.
But it's also possible the bank could cut or curtail a HELOC on a now-damaged home, says Frank Donnelly, president of the Mortgage Bankers Association of Metropolitan Washington, D.C.
Rates are low -- often in the neighborhood of prime plus 1 percent, Donnelly says. And you can take only as much money as needed, and only when you need it.
But before you can get an equity-based loan, you have to have some equity.
If your primary residence is worth more than your current mortgage, you might be able to get a home equity loan on that excess value.
Rates are fixed, and they're averaging about 6 percent, Donnelly says. The closing period is two to four weeks, he says.
However, you have to have equity in your home and good credit. Closing costs run from several hundred to several thousand dollars, depending on where you live, says Donnelly.
Also, you're taking on another debt, with your home as collateral. So if you can't pay the note -- or in this case, both notes -- you're risking foreclosure on your primary home to make repairs on your vacation home.
Refinance your home, cash out some of its equity and fix your vacation home. Or, in some cases, you might be able to cash out equity on your vacation home -- based on what it would be worth after the repairs, Donnelly says.
Rates are low -- about prime-plus-one for the best credit profiles -- and can be fixed or adjustable, he says. And you can deduct the interest on your taxes.
The downside: First, you need to have equity in the residence. With a cash-out refinance, lenders often loan up to 75 percent of the home's value, says Donnelly.
That means you'll need significant equity to walk away from the table with any cash. You'll also need a decent credit rating.
If you need to cover a couple thousand dollars, it might be tempting to use a loan you already have: a credit card.
It's easy, quick and you don't have to go through an approval process. But it can sink your credit rating, even as you're shoring up your second home.
Sometimes called signature loans, personal loans are unsecured advances that are granted based almost solely on your good credit.
These are usually smaller loans (think a few thousand dollars), but some banks may take it as high as the $10,000 range, Donnelly says.
You're not putting any assets on the line. You don't have to specify why you want the money. And because you're not putting it on credit cards, you don't have to worry about wrecking your credit rating if you carry it for more than a few months. However, not all institutions offer personal loans, and you'll need great credit.
Many 401(k) plans allow penalty-free withdrawals to repair a primary home, not a vacation home, says Wayne Bogosian, president of The PFE Group and co-author of "The Complete Idiot's Guide to 401(k) Plans and Providing Financial Education and Advice."
And a "hardship" withdrawal is "going to be a tough sell if you have a primary residence that is untouched," he says. But some plans will allow you to borrow money interest-free.
Taking money out of your individual retirement account is easy, but it might be wiser to exhaust other options first.
The upside: Your traditional and Roth IRA money is generally available for you. The downside: If you're using an IRA loan to "bridge" a check from an insurer or another loan, ask yourself what happens if you can't get that money within 60 days.
And last but not least, this is money you'd planned to have earning interest for your retirement. What happens to you if it's not there for your retirement?
Mortgage rates inched down this week and reached new record lows as investors kept their gaze on the "fiscal cliff."
The 30-year fixed-rate mortgage fell 2 basis points to an all-time low of 3.5 percent. A basis point is one-hundredth of 1 percentage point.
The 15-year fixed-rate mortgage fell 1 basis point to 2.85 percent. The average rate for 30-year jumbo mortgages, or generally for those of more than $417,000, fell 2 basis points to 3.98 percent.
The 5/1 adjustable-rate mortgage was 2.74 percent, the same as last week. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.
The volume of mortgage applications increased 4.5 percent last week, compared to one week earlier, according to the Mortgage Bankers Association
(Distributed by Scripps Howard News Service, shns.com.)