Today we are happy to have Mark Scheets, a writer for Total Mortgage Services, as our guest blogger. – The KCM Crew
Sooner
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.
Get Help
One step that will benefit you when looking for a home, is hiring an
agent. Most people find their agents 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.
Do Your Research
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.
Be Prepared
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.
Protect Yourself
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.
Westport and its surrounding areas, bathed by Buzzards Bay are an ideal location for a second home. If you are considering to join us for the beautiful summers in New England give me.
Noemi Cardoso
Local Office. Local Agents. Local Knowledge.
Serving MA & RI Coasts
www.DistinctiveHomes-NE.com
