They say home is where the heart is, but what if your heart desires more than one place to live and call the perfect homestead. Well, it's an ideal time to listen to that heart of yours and look into purchasing a second home. There is no better time than now to dig into the market and find that perfect second home. Whether you are interested in buying a vacation home, searching for a spot to embark on a new real estate investment, or just looking for another space where you and your family can have the option of staying from time to time, there are plenty of options. It's essential to have a clear plan and an all-encompassing budget when you commit to buying a second property. Here is what you need to know and the steps you should take to achieve your goal of obtaining your second home.
Decisions, Decisions
Whatever your inclinations are for buying another property, it can be a complex process when looking to find the right match for you. First and foremost, you have to determine your goals for purchasing a second home and how you aim to use it, considering your current financial situation. You'll have to ask yourself a few questions to better gauge the best location for your second home and figure out which category of the following addresses your motivation for this purchase:
Vacation home - You may want a home where you can get away, putting a pause on your everyday life. Something different than your primary residence.
Commuter or weekend home - This type of home is just far away enough and offers you a convenient escape from your everyday home for a change in scenery.
Real estate investment - You might want a second home for investing your money into a real estate venture. You then have the opportunity to rent out the property or possibly flip it to gain additional income.
Upgrade - Perhaps you need a change of scenery and are looking to move into a nicer home and location while keeping your old property as a rental.
A Consideration of Cost
You must determine if you have the financial means to buy a second house because, as you might have experienced the first time around, investing in a property can be a considerable monetary endeavor. Remember, you should not spend more than 28% of your gross monthly pay on housing costs. The expenses that accompany a second home can stretch farther than another monthly payment. It's essential to create a budget to help determine how much cash you will need for this investment and how much you will need to borrow. Depending on how you are using your second place, the amounts will differ, but you still must consider these costs for your monthly budget:
Homeowners insurance - A second home will cost more to insure than the primary home due to the increased risks of claims. Be prepared to spend extra, especially if you plan on renting the house out.
Utilities - Depending on whether you're using the home for specific occasions or renting it out, you'll need to keep up with the monthly bills to maintain the property's livability.
Seasonal maintenance - Be sure to figure in the cost for basic upkeep of the home even if no one is currently residing on the property.
Financing and Mortgage Qualifications
Once you've decided how you will use your second home, it's time to figure out how you will finance the property and determine the best type of mortgage. Usually, lenders will propose higher qualifying requirements and rates for those looking to buy a second home. Be prepared to make a larger down payment, meet more significant credit score standards, and pay a higher interest rate if you choose a conventional loan or jumbo loan in your quest to secure a second home. You must also consider if your financial situation can handle paying off two mortgages simultaneously if you are still repaying the mortgage on your primary residence. Always take your time to shop around and compare lenders before taking the next leap.
Securing a Top-Notch Real Estate Agent
Finally, to find that ideal second home, you must work with a local real estate agent in the area of consideration for the best possible outcome. The best agents will be your eyes and ears on the inside to secure the next house that you visualize yourself owning. They will provide a better understanding of the best possible means to make sure everything runs smoothly with your transition. That second dream home is now a reality, and it's right around the corner and ready for the taking!