Buying a second home – should you or shouldn’t you – that is the question. Well, buying a second home could very well be the absolute best thing you have ever done but you have to do it for the right reasons. Let’s talk about a few of the things you need to consider before making any quick decisions.
First you must ask yourself why you want to purchase a second home. Is it to invest in your future? Is it to use for a vacation home? Are you doing it for an additional income? The answer to these questions is critical so let’s look at all of the facts.
If you are buying a second home as rental property to use as part of your retirement plan then you have made the right decision. Buying a home forces you to make regular savings in the form of a mortgage payment each month and that is money in the bank when it comes to a retirement fund.
You must make sure,however, that you have enough money to cover the mortgage payments plus any additional expenses such as repairs, yearly taxes and insurance, if they are not a part of your mortgage payment, and anything else that may arise. The good news is if you buy the right house at the right price, your rental property should always stay rented.
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.
Housing, for the most part, appreciates over time. There are definitely ups and downs in the housing market but buying a home is a long term investment that can ride those tides very well. A home is an inflation proof investment.
The experts have predicted that both fixed rate and adjustable rate mortgages will probably remain in the single digits for the foreseeable future. Therefore, financing a home with a nominal down payment should remain achievable for quite some time.
Buying a home is very exciting and can be a very profitable experience but your decision cannot be made lightly. It is wise to give a lot of thought to why you want a second home, then make a financial plan and stick to it.
If you have some disposable income, then purchasing a vacation home may be just what you need to add a little spice to your life. Then by all means, go ahead and find the perfect house, buy it and enjoy.
Whatever the reason you want or need a second home, please think about your reasons, make a plan and follow through. It is also advisable to talk to a real estate agent about all of your options before diving in. A real estate agent can help you make the best decisions and could potentially save you thousands of dollars in the long run.