Travel Dreams: Owning a Second Home
As the winter weather roars on up north and people continue to work from home all over the country, the idea of a second home or vacation home may sound pretty wonderful right about now. If you’ve been dreaming of getting away from your same four walls and wanting a change of scenery for a bit, read on for some introductory information about purchasing a second home.
Second Home Location
Location is an important aspect to consider when buying a vacation home. It needs to be far enough from your primary home that you really feel like you are getting away when you visit, but close enough so you can really utilize the property. If it’s too much of a hassle to get to, you’ll hardly enjoy it. Whether you like the idea of a beach retreat or a mountain town, research the area before purchasing. Using a knowledgable Realtor® in the area can help minimize the amount of legwork you have to put in. They can direct you to the homes and neighborhood that best fit your needs easily. They can also provide information about area attractions, local regulations that may affect your purchase, etc.
Loan Options For Second Homes
You may be wondering how to afford a vacation home. The good news is that there are several home loan options out there for purchasing second homes. Something to keep in mind though, is that because a homeowner will prioritize the payments on their primary home, second home purchases are considered a riskier loan for mortgage lenders. As such you will need to be prepared for a higher down payment, a slightly higher interest rate and a higher rate on your insurance as well. If you own your primary residence free and clear, some of these higher costs may be mitigated. Just like with a primary home purchase, factors such as credit score, debt-to-income ratio and the amount you put down all affect how much you qualify for.
Second Home Maintenance
Besides the second mortgage payment, don’t forget to budget for maintenance items as well. A good rule of thumb for any buyer is to set aside the equivalent of 5% of the purchase price each year for basic repairs. Don’t forget about the utilities. Depending on how often you use the property, you may be able to have some utilities deactivated when you aren’t there. Water is a good example – you wouldn’t want to show up ready for a vacation to find that a burst pipe has been leaking for several weeks. In addition, you may consider hiring a property manager to look out for your second home, even if you don’t decide to rent it out while you aren’t using it. They can make sure the yard stays tidy, inspect for damage after a storm and more. That would be an additional cost that could save you a lot of time and trouble in the long run.
Don’t be daunted by the idea of buying a second home. There are a lot of things to consider, but having a good lender and Realtor® in your corner will greatly reduce the stress level and headache for you. With interest rates the lowest they’ve ever been, and traditional travel options limited, now is a great time to look into the possibility of becoming the owner of your dream vacation home.