Things To Consider when Buying a Second Home

Things To Consider when Buying a Second Home

A second home is a home you don’t live in full-time and isn’t your primary residence but whose primary purpose isn’t as a rental property or not as an investment property.

Despite a slow housing market nowadays, demand for second homes remains healthy. Second homes give people the chance to live another lifestyle, in another part of the country or even outside of the country they currently live in.

In the US, there were 7.4 million second homes in 2016, according to a report from the National Association of Home Builders (NAHB). The most popular place for a second home is Florida, California, New York, Texas, Michigan, North Carolina, Arizona and Pennsylvania.

In the UK, the popular places for second homes are Manchester, Cambridge, Camden and Kensington & Chelsea, to name a few. In 2019, BBC announced that there has been a 200% increase in second home ownership among British people.

Before joining the club, make sure you’re equipped with some important real-life considerations for a dream-life vacation home.

Avoid impulse buying.

This is true in whatever kind of purchase you have to make. What more for a big purchase decision such as buying your second home? Have a thorough research first about your purchase. Don’t buy in a whim as you may end up with a second home you can’t afford or that doesn’t fit your needs, and making your second dream home a nightmare.

Choose the right type of home for you.

When looking for a second home, you may choose between a condo and a single-family home. For buyers who only plan to use their homes occasionally and don’t want to deal with year-round maintenance, a condo is a good choice f. But if you are value privacy, stick with a single-family home. 

Set your goal, make the right choice.

Base your choice on your needs and be realistic about what type of second home suits your lifestyle. A second home for a weekend getaway should be within a day’s drive of your primary home. If it will someday serve as a retirement spot, it should have access to basic needs and services and there should be health care services available in the area. 

Shop around for a mortgage.

The market changes constantly especially nowadays that the real estate industry is vulnerable. Always search for better deals possible and don’t settle with whatever terms your lender offers you.

If you are still unsure, you might need a help from an online mortgage rates calculator. This tool will quickly return your P&I payment, the all-in monthly payment and how much interest you would pay on your home at each rate throughout the duration of the loan.

The calculator has three major parts or portions : Home Price and Down Payment, Mortgage Structure and Other Ownership Costs. The first section would require you to input the Home value or the total amount or contract price of the property, Down payment – remember to pay at least 20% so you avoid additional taxes, and the Mortgage amount which is the difference between the amount of the property you want to buy and the down payment.

The second section is where you put the length of loan which is up to 30 years, the interest rate which can be obtained by entering your details at the current local mortgage rates – a calculator which can be found at the bottom of the page made to help perform accurate calculations and find a local lender; the Increment comparison rates and PMI can be left as is.

For the last part of the calculator, you have to know your Annual property tax, Annual homeowner’s insurance and Monthly HOA fees, but if you are only interested in the principal and interest portion of the payments, you may enter 0 in the property tax, insurance, HOA and PMI fields.

The calculator will show you 5 different scenarios or reports, which is based on fluctuating interest rates that can greatly impact your finances. The report highlighting the loan scenarios is also printer friendly so you can bring it anytime and anywhere you need it. This calculator really comes in handy, especially at this point in time when we really need to carefully plan and execute any kind of investment we want to do.

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