Buying a second home may seem like something only rich people would do. Not necessarily. Some people purchase a second home for vacation purposes, additional income or a place where they can eventually retire. Whatever your interest is, you need to consider a few things before taking the plunge.
Follow these tips to ensure that you make a sensible decision when buying a second property.
Examine your finances
Before you go out there and start shopping for houses, you might want to run the numbers and add up all the expenses of owning and maintaining a second home – utilities, property taxes, upkeep and upgrading. Assuming that you won’t be able to rent the property, will you still be able to fit these expenses into your budget? If not, then you might want to hold off buying.
Consider your goals
People have various reasons for buying a second house. Will it be used as a rental property? Or will be used as a vacation house? Let’s say you’ll be using it as a vacation house, how often will you be able to visit the property? Will you stay in that house during the weekends or just in the summer? Answering these questions will help you determine whether or not it makes sense to invest on a second home.
Choose the location carefully
While it is tempting to buy a property near the beach, you also want to make sure that it’s accessible for everyone. This is especially important if your purpose is for you and your loved ones to gather together and spend some time in the beach. Booking a flight just to get to the vacation house may not seem like a big deal for you, but families with young kids and older adults may be hesitant to go.
Understand your mortgage options
Most buyers will need a mortgage to help with the financing. If it is an investment property, stricter guidelines are involved. Most lenders will require you to put down 25% down payment. Also, expect to pay a higher interest rate since this will most likely be mortgage number 2.