Are you thinking of buying another home, perhaps as an investment or a vacation home? While buying another house has its benefits, it also comes with unique challenges. Bearing this in mind, there are some crucial considerations you need to take into account before even start shopping for a home. Here they are.
Make 100% Certain that You Could Comfortably Afford Two Home Loans
If you’re still not finished repaying your loan for your primary home, you have to ensure that you could afford monthly mortgage payments for your second home. Generally speaking, you would need to make a 10% or 20% down payment and go through the entire mortgage approval all over again so make sure you could handle that, explains a top mortgage lender in Tempe.
Work with a Local Real Estate Agent
Whether you’re looking to buy a house as your vacation home or rental property, working with a real estate agent familiar with the area you’re looking to buy a house in is immensely vital. Your agent could give accurate information on market prices, neighborhoods, as well as the benefit and drawbacks of certain properties.
What About Potential Tax Implications?
For instance, if you’re planning on using your second home as a real second home, you might be entitled to a deduction on your property taxes and mortgage interest, which are the same tax breaks you enjoy by owning your first house. Also, if you’re planning on renting out your second house, you’d need to consider the tax consequences especially if you want to rent out the house for more than 14 days in a year.
Don’t Forget About Extra Costs
If you’re going to utilize your second home as a real home or vacation home, you still need to consider that you probably won’t be staying in it for most of the time, so you need to factor in extra costs like utility bills and a property manager to check your home when you’re away. Likewise, if you want a house near the water, you’ll probably be required to have flood insurance coverage, on top of your standard home insurance.
Purchasing a second home could very exciting, but it could likewise be complicated and time-consuming. With proper planning, advance preparation, some forethought, and help from professionals, you could make a more informed decision that won’t put your finances in a tight spot.