Buying a second home is a very exciting possibility. The thought of being able to own a place to escape to on weekends, holidays or even a seasonal home to enjoy by the beach is nothing but amazing. As you assess the affordability of this venture, consider all aspects using these checklist items below.
Can you afford it?
There are other costs to owning a second home other than just a mortgage. Start with that monthly figure, but then build from there. Mortgage rates on second homes can come with a higher interest rate especially if you consider renting it out. Next, factor in additional expenses like insurance, taxes, utilities and general maintenance. If you consider a single family, you may need to hire someone like a property manager. For condos, this is typically handled by the maintenance committee but be sure to factor in your monthly association fees.
Consider the exact location that will serve your needs all year round to maximize enjoyment and use. A beach location can sometimes be enjoyed all year round depending on where it is. Or even a mountain home can offer winter sports as well as summer recreation. The right location can make your home more attractive to renters as well should you decide to do vacation home rentals.
Connect with your current insurance agent and inquire about insurance rates for your potential second home. Your current agent can probably give you the best advice as well as rates as you are an existing client. Consider things that are potentially weather related hazards in your desired location to see how much that impacts your premiums.
Locate the Home and Enjoy
After you have done your homework about all of the expenses, then you can locate and purchase a home. Once you have officially purchased your dream vacation home it is time to enjoy the benefits. This home is now yours which means it can often cost you less than renting pricey hotel rooms or other rentals. Also, you will not have to worry about limited vacancies or crowds to contend with. Finally, keeping your home longer term can potentially help build equity and you also have the option of possibly renting it for added income.
Put your feet up, relax and enjoy your home away from home.