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Primary homes are associated with putting down roots. Maybe you have plans to remodel your home and sell it for a profit at some point down the road, but for the foreseeable future, primary homes are usually bought with the intention of living in them for quite some time. Second homes, however, offer several options to homeowners seeking to expand their property portfolios. The following information will help you get the ball rolling on your second home purchase.
Buying a Second Home
The second home buying process starts with a question: What are you looking to get out of your second home? Is it a vacation home or an income-producing investment? Do you have visions of the property generating cash flow as a short-term rental? Or perhaps your long-term goal is to retire there. Whatever the case may be, you’ll need to prepare financially.
If you don’t plan to pay cash, purchasing a second home means you’ll have a new mortgage stacked on top of your existing one. To prepare for the uptick in homeownership expenses, it’s critical that you have a solid savings strategy in place and that you’re steadily making progress toward your goals. All the typical costs associated with buying a home apply here, except you’ll likely face higher interest rates this time when applying for a home loan. In general, second home loans pose greater risk to lenders, leading to higher interest rates than what homeowners typically see on their primary home loans.
Two of your greatest assets in buying a second home are your real estate agent and your mortgage broker. Your agent will share helpful information about the market where you’re buying, they’ll help find the home that best fits your needs, and they’ll help you craft a winning offer. Your mortgage broker will help you find the right home loan for you. In the meantime, you can do a little homework on your own to help you get an idea of what your second home purchase will look like.
Use our free Home Monthly Payment Calculator by clicking the button below. With current rates based on national averages and customizable mortgage terms, you can experiment with different values to get an estimate of your second home monthly payment for any listing price. Add the numbers to your current monthly mortgage costs to make a well-informed estimation of your total monthly mortgage costs.
Image Source: Getty Images – Image Credit: Giselleflissak
For more information on preparing to buy a second home, read the following blog post:
What to Consider When Buying a Second Home
Featured Image Source: Getty Images – Image Credit: AleksandarNakic
