Factors To Consider Before Buying A Second Home
With summer in sight, you may be considering purchasing a second home to enjoy family vacations or perhaps just have a change of scenery while working from home. “A second home is a wonderful investment for many people,” says Grace Tirrito, a sales associate at ERA Justin Realty. “But before you make the leap make sure you do your homework. There are many things to consider when buying a second property.”
Can You Afford It?
Unless you own your primary home free and clear, it’s extremely important to budget for having two mortgage payments. “As a buyer, you may be expected to put down a higher down-payment, or face a higher mortgage interest or homeowners insurance rate,” Grace explains, “I work with my clients to ensure they understand the closing costs as well so there are no surprises.”
To classify the property as your second home, you have to spend a significant portion of the year there. Depending on your loan type, you may be limited to the number of days you can rent it out. Conversely, if you rent the property out for 15 days or more, you’ll have to report the income to the IRS. “It’s important to work with a good lender who can explain the difference between what’s considered a second home versus an investment property,” advises Grace.
Location, Location, Location
“When looking for a vacation home, find a place far enough from your primary home so it feels like you’re getting away, but not so far that you can rarely travel there,” advises Grace, adding, “It’s also very important to consider what amenities you want while on vacation. Make sure you do your research on the area.”
Consider how utilities will be handled when you’re not in residence. Will you keep them all active and pay for them in full even when you aren’t there? What about lawn care? “I recommend my clients consider the extra work they will need to put in to maintain this home or whether they want to hire a property manager to do it for them. These are additional costs many don’t consider.”
Considering a second home? Call ERA Justin Realty at 201.939.7500 to talk to Grace or any of our experienced professionals.