What You Need to Consider When Buying a Second Home

DSCN9366Sooner or later you may reach a point in your life where you are financially stable and plan to purchase a second home.

For the most part, people who look to buy a second home are either looking at it as an investment or somewhere to vacation. It is important to become familiar with the process when looking for and making the decision to purchase a second home.

Purchasing a second home is similar to the purchase of your first home, but there are also some important differences that you may not be aware of.

Two of the most important things to consider when buying a second home are to know what you’re looking for and how much you can spend before beginning the process.

 

When considering buying a second home, timing is a big aspect of the purchasing decision.

If you are in the middle of your career or ready to retire, you need to ask yourself what is the point of buying a second home. Many homeowners will ask themselves “Do I want to use this home as a personal retreat or as a rental property?”

Another question often asked is “Can I afford this?” You may have to wait 6 months or a year, but having a good understanding of the current market and knowing when you are planning on making the purchase, will get you what you want.

One step that will benefit you when looking for a home, is hiring an agent. Most people find us through friends, family members or colleagues. The agent’s job and expertise is in helping guide you down the correct path and being there to answer whatever questions you may have.

Your second home can be whatever you want it to be, but one thing to keep in mind is that the location and property need to be a good fit with your current lifestyle.

A good idea for buying an investment property is to make sure that it is somewhat near your current home, in order to be close to it in case of an emergency. When considering a vacation home, especially one that is far away, it is a good idea to talk to the locals who live there to get their prospective on the area. This is important because you will not be at the house year round; and you need to see yourself enjoying living there.

Whether you have planned to purchase a second home for years, or have finally started considering it, it is extremely important to make sure all of your finances are in order.

It is a good idea to know exactly what is needed financially to get your plan into motion. When applying for a second mortgage, there will be stricter lending and mortgage requirements, especially if you will not be living in that home.

Another aspect to take into consideration is your taxes, which will be based on the use of your second home.

The IRS has declared “if you live in your home for more than 14 days, or more than 10% of the time you rent it out in a year, then it is considered your personal residence”. If these conditions are not met, your home will be considered a rental property and you must report all rental receipts as income.

When the time comes to finally figuring out how to purchase your home, weighing your options are important. It’s good to know that buying an existing home is far cheaper than buying land and building.

Many people with second homes have made financial mistakes with their home and are looking to sell quickly to cut their losses and move on. This fact could help a buyer if the house is similar to what they are looking for, as it can be had for a cheaper price.

A mortgage on a second home will have a higher interest rate than one on a first home. It might be a good idea to consider a home equity line of credit (HELOC). A HELOC allows the buyer to tap into their existing home’s equity so that you can provide a bigger down payment.

If the time ever comes where you decide you would like a second home, make sure that you do your research.

Being aware of what you are getting into is always smart before diving in. There are various differences between the ownership of a primary home compared to a secondary home and knowing these differences will help out immensely. However you decide to use it, those who pursue the ownership of a second home will have to take extra precautions in protecting their investment.

“If you know someone who would appreciate the level of service and expertise that I provide, please contact me and I’ll be happy to follow up and take great care of them.”

 

About The Author

Jolie Powell

Jolie Powell has been a distinguised leader in the Real Estate industry since 1987. Prior to entering the world of Real Estate, she worked as a TV producer for the Advertising Agency, Dancer Fitzgerald Sample in NYC. Jolie's expertise in counseling buyers and sellers brings people together from Long Island, and indeed, Globally! Having lived abroad and traveled extensively, Jolie has an excellent understanding of many cultures. As a Cuban-born American, she is fluent in Spanish and communicates well with international clients relocating to the North Shore of Long Island. Jolie is proud of the high level of trust she and her clients have established and looks forward to continue building exceptional client/broker relationships.

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