Buying a second home is very exciting. This may be a home in the place where you vacation every year, somewhere that you like to go and relax and enjoy your time off. Perhaps you are looking for an investment opportunity. Whatever the case may be, here are some things to consider when it comes time to buy and finance your second home.
• It is a great time to buy a second home – the mortgage rates are low
• If you have a strong credit history you are guaranteed the best rates
• You can use the equity in your current home as a down payment or closing costs
• Lenders are offering some really affordable loan options right now
• Remember, the guidelines for how much you can quality for is based on 28% of your gross income
• If you are a long term homeowner, you may be able to borrow more than you think
A second home as an investment property is a fantastic idea. If you are looking for a way to save money for your retirement, this is it. A second home forces you to put away money every month in the form of a mortgage payment. When it comes time to retire, you can sell it or use the income, which could be significant if you have it paid off.
Another reason a second home as part of your retirement plan is a good idea is due to the fact that your investment money is subject to less income tax and the interest and taxes may be deductible. So planning ahead could pay off in a big way.
If you rent out the property don’t forget about the ongoing expenses such as taxes, insurance, property manager, etc. We recommend that you save enough money to cover a years worth of rental income and maintenance. That way if business is ever slow in renting out the property you’ll always have your emergency fund to fall back on. The good news is if you buy the right house at the right price, your rental property should always stay rented.
If a second home is something your interested definitely talk to your real estate agent about more information on buying a second home. They can give you insight information about making this investment.