When you are able to buy your own home, you invest in your future, provide a place for your family to grow up, and fulfill your dream of homeownership. To make the dream even better you may be in a position to buy a second home for business or pleasure. But before you prepare to buy your second home, there are some things you should become aware of. Here are some tips to help you prepare to purchase a second home.
Plan To Have a Down Payment
As you well know, it is a considerable investment to buy a piece of real estate as your home. But when you decide to buy a second home, there is a bit of an increased financial risk to get a mortgage from a lending bank. For this reason, you should be aware that you will need to put a down payment toward the purchase of your second home.
Whether or not your home is for business or pleasure, talk to your mortgage broker about the loan requirements for a second home property. Many mortgage companies will require you put 20 to 30 percent down toward its purchase, for example, so you may need to plan according to take it from a retirement account or save up. However, if you are putting such a sizable down payment on your second home, you won't have to worry about paying a mortgage insurance premium along with your principal and interest payments.
Research the Area Well
When you are putting up the financial investment to buy a second home that you will use for vacation or business travel, you will want to make sure it is in the right area. If you are looking to buy a property on the beach or in the heart of a big city, be sure you have chosen a strategic location for you to get the most out of your property and be in a safe area.
If you are looking to buy in a popular tourist destination, it will be helpful if you talk to a real estate agent who is local to the area and has knowledge of the various areas and neighborhoods. They can recommend a neighborhood based on crime statistics in the area or based on their own experience and personal knowledge.
A second home will provide you with your getaway location or place to stay to conduct business out of town, but when you are not using it, you might consider advertising it as a rental property. Your second home would make a great rental property for you to collect on some of its rental income from tourists and vacationers visiting the area.
Look into hiring a property manager to help you handle the home as a rental when you are not using it. Then, block out the rental's availability for your use when you plan to use it.
Contact a real estate agent who handles second home real estate for more information.