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5 questions to ask yourself before you buy your second home

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5 questions to ask yourself before you buy your second home

You may dream of a vacation home, but is it the right time for you to make the dual-homeownership dive? These questions can help you decide.

Have you ever dreamed of a vacation home, your own private spot to escape the hustle and bustle of life? You’re not alone. Nearly everyone has fantasized about purchasing a hideaway. Whether it’s as a second home as an investment, our current fall rainstorms make now an especially attractive time to buy.

Before you jump into dual-homeownership, take a moment to decide if you’re ready by reviewing these considerations:

How much will you actually use the property?

Does your job give you enough flexibility to get away for an extended period of time? Are you the kind of traveler who wants to see the world or have you found the place you want to visit again and again? If you won’t be able to get away or you know you want to visit several other areas, now might not be the time for you to purchase a second home.

How are the mortgage rates looking?

Typically speaking, mortgage rates on second homes are higher than those for your primary residence. In addition, if you need income from the property’s income to cover the cost of your home, expect to pay an increased rate. (This is because the needed income would classify your home as an investment property, putting it in a riskier class.)

Is the cost a fair market value?

Look beyond the current real estate market in the area. What trends has the area seen? Has the region recently become popular? Is it only within the last few years that property values have begun to rise? When excitement surrounds any commodity, a bubble is created. Unsupported inflation occurs. Suddenly the masses are paying astronomically inflated prices. Don’t let this be you.

Do you plan on renting the property? Can you?

Many dual-homeowners offset the cost of a second mortgage by renting the house when they’re not there. If this is your plan, what’s the rental market like in the area? Will renting be feasible? And more importantly, will you be able to rent it during the time you don’t plan on using it?

How’s your cash flow?

If you plan on renting to offset the cost of your vacation home, is this income a necessity or a luxury? Will you be able to consistently make the mortgage payment and cover the additional expenses associated with renting whether it’s rented or not?

Have questions about purchasing a second home? Contact one of our loan officers today.

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