Have you been considering whether to buy a second home? There are many things to consider before doing that. These 4 things will help make that decision a little bit easier 🙂
1. Decide whether or not a second home is something you can actually afford.
Before getting your heart set on a specific property, take an in-depth look at your finances and consider more than just the costs of having a second mortgage to pay. Bear in mind that mortgage lenders might charge more interest on a second home if you plan on renting it out, given that lenders view rental homes as being significantly higher in risk than a primary residence.
Determine whether or not you can afford to pay property taxes, insurance and other ongoing costs even when you aren’t around. Electricity, water, garbage and gas are bills that will continue to come, even when you aren’t physically on the property.
And much like your primary residence, this second home is virtually guaranteed to entail a few unexpected maintenance charges. Do you want a yard that your dog or your kids can play in? Plan on paying for landscaping upkeep when you’re away from your vacation property.
Moreover, if you intend to be away from your second home for more than just a few weeks, it’s probably best to bring a property manager on board who can check in on the home and take care of things when you aren’t around.
2. Choose A Location
While a home right on your favorite beach probably sounds ideal, will it be possible to visit this property as often as you want? Buying a second house when you’ve just got a handful of weeks to vacation every year or live several thousand miles away, may not be worthwhile – especially if you don’t intend to use this home to generate rental income.
But, if you already spend a lot of time in the area in which you plan on buying and can actually afford another property, then a vacation home will probably be a good investment for you.
3. Learn More About Insurance For Your Second Home
After you have an understanding of the potential ownership costs for your second home and know the approximate area in which you want to buy, talking with an insurance company is the next step.
Begin the conversation about second-home coverage with your current insurance company, where a solid business relationship already exists. If you use this same company to secure coverage for both properties and your vehicles, you’ll likely qualify for a better rate.
It’s important to note, however, that a better rate doesn’t necessarily mean that you’re going to get this coverage cheap. If you buy a property in a flood-prone region, you’ll probably have to pay higher insurance rates.
4. Find your second home and enjoy a vacation anytime
Once you’ve budgeted for all the possible expenses associated with this purchase and have located a prospective neighborhood, get in touch with a trusted real estate agent and start shopping.
Enjoy the benefits of owning this new home after having settled in. In addition to enjoying your vacations right in the comfort of your very own abode, you’ll also discover that owning a vacation home is very cost-effective in comparison to using a vacation rental, especially if you wind up spending a lot of time in yours.
Additional benefits? No crowds and lots of privacy which are things that you aren’t likely to get at the typical hotel.
And, if you buy a second home in a desirable location, you can gain a number of long-term financial benefits even if you don’t choose to use it for rental income. Depending upon how you opt to use this property, you could qualify for a few significant tax benefits.
You can take refuge in a vacation home. Use it as a place to unwind, relax and spend quality time with your loved ones in an area that you truly enjoy.