There are a number of reasons for wanting to purchase a second home: to have a vacation getaway, as an investment, or even for a place to eventually retire. No matter the motivation, recent years have seen more people buying second homes. In fact, according to Yahoo! Finance, sales of secondary properties have jumped 7% since 2011, with more than 500,000 second home sales per year. So, is buying a second home right for you? Consider these tips as you navigate the second-homebuying process.
Determine your ideal location
Whether you want a mountain retreat for ski vacations or a sunny bungalow on the beach, consider the convenience of your chosen locale. Travel time is inevitably a factor in the purchase of a second home. If you’re looking to make weekend trips, you probably want to look for homes within a comfortable driving distance from your primary residence. For those looking to purchase a home farther away, you’ll need to factor in the cost of airfare and the possibility that you may only be able to visit a few times a year.
Consider what you can afford
Buying a second home requires a different financial process than buying a primary home. Be prepared to encounter altered mortgage rates and a higher minimum down payment (most lenders require at least 20%). Second homes are also subject to different tax rules. However, even with these financial considerations, many experts agree that now is the time to purchase a second home, especially in Sunbelt areas where the weather is pleasant and prices are still relatively low.
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Protect your new home
Second homes may be more likely to be damaged, due to locations that are more susceptible to natural disasters (think hurricanes) and lengthy periods of vacancy. As a result, you may need a different insurance policy from the one that covers your primary residence. An insurance specialist can help you tailor your policy to best protect your home, which may include adding flood insurance and other extras.
Enlist a real estate agent
Unless your desired second home is in the same neighborhood as your primary home, you’re likely buying in an unfamiliar market. An experienced real estate agent with knowledge of the area can guide you through the process and help you discover your dream vacation home at a reasonable price.