There are many different reasons why people choose to buy a second home, especially when the economy is down. Whether it is for a vacation home or a financial opportunity, you can get really good deals on homes right now. If you are planning on buying a second home there are things you need to consider. Making sure you take your time while planning a second home purchase is important so you get the best for your money. If you are going to buy a second home this year, here are some tips you should consider.
1. You are going to need to figure out whether or not buying a second home is a good financial decision. No matter what you want to use the second home for, you want to make sure you are making a decision that makes sense financially. A lot of people who buy a second home are surprised by the actual cost of the investment. You probably will not be at your second home everyday, so there are costs that come with this fact. You might need to hire a maintenance crew or a person to mow your grass, which is often something people forget. There is also the aspect of what income you might earn if you decide to rent the property. You are going to need to figure out how much money you have each month to devote to another house and then decide whether or not you can afford it.
2. You also need to consider what type of home to buy and the location you want the home to be. If you choose a home that is in a bad location, then you will probably not be able to rent it out to people easily. You need to use common sense when it comes to location and your own experience with various locations. For example, you do not want to buy a second home you plan on renting in a location where crime is high. The local economy for that area, property tax estimates, quality of schools, medical centers and resale values are all aspects of a location you should look into before you buy. Knowing the type of home you want to buy is also important in the same manner. If you own a single-family home then you will have different costs than someone who owns a condominium or townhouse. You will have to figure out which type of house would meet your needs and best fit your goals for the home. If you do not like doing outside work such as mowing the lawn, then you might want to get a condominium where that is taken care of for you. Although you will pay more money for the house if outside chores are done by a company or person, so you should be aware of that as well.
3. If you plan on renting the property out then you will also need to be aware of all aspects of being a landlord. When you are a landlord, you have many different responsibilities and you need to have good instincts about possible renters. You will be going through a lot to find a good renter or tenant that is honest, dependable and trustworthy. You will also need to prepare leases or agreements with people and you will need to be able to communicate what the guidelines and obligations are on both sides. Repairs, annual maintenance, monthly renting checks and even legal issues are just some of the aspects of becoming a landlord. It is a lot of responsibility and it always takes a couple of years to turn your investment into a profit when you rent a home out.
4. Looking into tax implications of a second home are also important before you buy and should be considered into your planning. You will have property tax for two different homes both from state and location. Make sure you plan for both of the property taxes and know what you would be paying for each before you buy the second home. If you know ahead of time what you would be paying, you are more likely to know how to plan for the taxes. You might be able to decrease your monthly expenses on your phone bill so that you can save that money for the property taxes later on. If you rent out the second home then there are also tax implications on this as well you should look into. If the home is a vacation spot for you then your property taxes will depend on how much time you spend there.
5. You should consider various options when it comes to financing and paying for the second home. Instead of going through a bank, you can try to borrow the money from your family or close friends. A bank will charge you a good amount of money in interest, and this is really just wasting money. Borrowing money from a close relative or friend will prevent the fees associated with interest from a bank loan. It is also a good idea to find another option instead of a bank for financing because the banks are not doing well in this current economy. You do not want to get a loan from a bank and then have the bank go out of business without any notice. Make sure that you are aware of other options out there in your local county assistance department as well. Sometimes you can go to your local county office and find information about financial assistance relating to buying a home. The most important thing you can do though is consider all options when it comes to financing your second home so you do not waste your money.
6. A lot of people use a down payment and a loan to pay for a home, but is harder when you are buying a second home. When considering buying a second home, you want to think of all possible ways you can get the most down payment money. If you get more money for a down payment then you will most likely have a smaller loan, which will decrease any interest amounts. It is always a good idea to have a down payment that is about 25 percent of the purchase price of the home. There are several different ways you can get the down payment money, if you just think a little harder about it. You might decide to sell an extra car you might have to a personal buyer, which will increase the sale price. Borrowing against life insurance or a credit card is also another option you might choose to go with to get a higher down payment amount ready. The equity in your home might also be an option for you if you plan on staying in your home for more than five years. There are several different things you can do to come up with the money, you just have to be willing to sell something of value to do it.
If you follow these six tips then you will be able to buy a second home without trouble and without wasting your money. You always want to look around for the best deals, whether it is a home or a bank loan. If you can plan and consider various issues before you buy the second home, you will be able to make a great decision. Remember, a second home can be what you make of it and it all starts with careful planning and consideration.