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4 Steps to Buying a Second Home
Purchasing a second home can be a big step. Whether seeking a cabin in the woods, a getaway beach home or modern condo in the city, buying another property is a big decision. Here's how to know if now is the time to buy.
Affordability
Assessment of personal finances is critical in determining whether to purchase a second home. Beyond the cost of a second mortgage are other financial issues such as what interest is charged on a second mortgage. It may also depend if the home will be rented out as lenders consider rental properties a higher risk than those listed as primary residences. Other factors may include:
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Insurance
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Property taxes
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Ongoing costs such as utilities (water, electric, gas, trash removal, etc)
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Unexpected maintenance charges such as landscaping
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Cost to hire a property manage to check on the property while away
Location
Having a property by the beach may sound great but it may not be a great investment. Some things to consider include:
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Ability to visit the second home as often as desired
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If not used as a rental, will home get used enough to make it worth the investment
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Decide where is the ideal location before buying and whether it is affordable versus the time that will be spent using the property before purchase
Investigate
Chat with the insurance company to see what is next after finding the general area in which to buy a second home. Begin by speaking with the current insurer with whom a relationship is already established. A better rate may be available for multiple lines (existing home, cars, etc). Better rates may not necessarily be more inexpensive. If potential new property is prone to flooding, insurance rates may be higher. Homes with swimming pools also have higher rates as do pools with no fence or gate which may not have coverage available at all.
Find the Home
After all possible expenses are accounted for and a neighborhood is identified, contact a real estate agent to get started. Once settled, soak in the benefits of the new home. A vacation in the comfort of one's own home is a true luxury. When time is spent with family and friends in the new home, the cost savings will become apparent compared to vacation rentals. Privacy and no crowds (like in hotels) are another added bonus of having one's own property. Financial benefits may exist in the long term even if the property is not rented out. Tax benefits may help lessen the financial burden. A vacation home is a space to unwind, relax and enjoy time with loved ones. Soak it in and enjoy the new home.
Get more advice on the steps that you need to take to owning a second home.
Contact one of our agents today.
