3 Tips for Buying a 2nd Home |
A second home purchase is a natural investment for a nation wary of terrorism alerts and stock market doldrums as buyers look for a secure home away from it all. Most people end up living and retiring in their second home, which makes it a great value because if they end up selling their primary residence, the value (of the first home) typically exceeds the cost of the second home and they can pay off the second home and live off any extra money. Current market conditions of reduced demand, but low mortgage rates make it a relatively good time to buy -- for now. Limited inventories in all housing sectors will likely drive up prices as second home buyers return to market with the strengthening economy. When purchasing a second home there are several important factors to consider including: Financing: A mortgage broker can help you shop around for the best deal on a second home loan, which are just as competitive as primary home loans, though with tougher qualifiers. Lenders know you'll have two mortgages and, if you get into financial difficulties, you'll likely let the second one go first. Contact real estate agents located in the area of the second home or who are familiar with the community. They know the market and can price competitively. Timing: Virtually every real estate market has a seasonal ebb and flow when buyers are scarce and purchase costs drop. Paying as little as possible on real estate investments is key to future profitability. In many areas, the slow market begins when schools open and families want to stay put for continuity in education, friendships and community. Other areas slow to a crawl when the winter snows arrive, while in sunny climes that could be the start of buying binges. Location: Obviously, location is as important to a second home's value as it is for any home. If you aren't choosing a new home in a resort or development where prices are relatively fixed, shop for a second home much in the same way you shop for your first home. For value, buy the cheapest home in the best block or buy into the cheapest neighborhood in the best community. Also look for the potential for appreciation, typically found in areas where demand eventually will. |
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