You’ve finally made the decision to buy a second home; maybe you have family you visit regularly who live far away and you’d like to have a place that’s close to them, maybe you have worn out the welcome mat so often at the hotel in your favorite vacation spot that now it’s time to just post up separate residence there, maybe your second home is an investment property that you’d like to rent out for time shares or for even a more permanent resident. Whatever the case may be, finding a second home requires a lot of planning and consideration. Here are four things you need to figure out before you go ahead with the concept of even considering a second home purchase.
The first consideration in your second home discussion; can you afford it? Obviously. Do you own your first home or are you still paying the mortgage? If you own a substantial enough portion of your home, you can use this equity to help ease the financing burden. Are you still working? If you are still regularly working and your still struggling to make ends meet currently, adding that second home will just further exacerbate your situation.
So, you think you can afford your second home; you’ve used the mortgage calculator online and you looked over the numbers in your Quicken; it can be done. Now, do yourself a favor and pull out the pencil and paper and calculator and get the real numbers. How much will this actually cost? What about maintenance? Taxes? Dues? Time off work? Getting to your second home? All these things bear great weight on your decision whether or not to purchase a second home.
The next thing to consider; once you’re sure you can afford it; is how much time would you spend at your second home? Enough to make purchasing one worthwhile? Are you busting your hump 52 weeks a year at the office, 60 hours a week? If that’s you, a second home might not be in the cards. Do you still have kids in school? If that’s the case you won’t be able to retreat as often as you might like to your getaway home. Figure first the cost then move on to see just how much time you would spend in this home (unless it’s an investment you plan to rent out and eventually retire in). If that’s the case though you need to figure the fact that you’ll have to be a ‘remote’ landlord. If there are any big fixes which fall on your dime, you’ll have to get there or get someone out to investigate.
Once you have figured that you can afford your second home and you would be able to spend time there, don’t jump the gun. Take a period where you just consider it; if you make too brash a move you could find that your figures were off for whatever reason. Speak to a real estate agent, speak to a broker, speak to your friends, speak to you pastor; just don’t rush into another potentially weighty engagement like a second mortgage before you’ve gotten all the facts.