Already on ArticleSlash?

Forgot your password? Sign Up

Factors in Buying a Second Home

Karen Bellas
 


Visitors: 239

Purchasing a second home or ‘vacation’ home is very much like buying your primary residence. As far as lending goes, you will supply the exact same documentation as your primary home loan. However, there are a few differences that a buyer should learn if they are searching for a second place in which to live part-time.

Recognize a Lender's Definition of a Second Home

Your lender will want to go through a validation process to officially identify your home as a second home. The first thing that your lender will look at is whether or not your second home is smaller than your primary residence. Your lender will consider not only the size of the home but also the cost. The next thing that the lender will look at is the distance between the primary and the secondary homes. Your two properties should be at least 100 miles away from each other. If you meet these criteria, then your new purchase can be classified as a second home for lending purposes.

For many people, their second home does not meet these requirements. However, the down payment amount for a second home that does not get official second home status from a lender is not that much more than that of a primary home. If your home does get secondary home status for lending purposes, you can expect your required down payment amount to be slightly less. Even without this status, however, your down payment amount will be very reasonable. You can expect your down payment for your second home to be between five to ten percent. As with every mortgage, the more money you can put down, the lower your interest rates and monthly payments will be.

Discuss with Your Lender Your Options

It is important to ask your lender what all of your mortgage options are for your second home purchase. Your lender will want to know what your plans are for the property. If you are going to keep the property for many years, a fixed mortgage will be your best choice. However, if you do not plan to keep the property for a very long time, talk to you lender about an adjustable rate mortgage or a balloon mortgage option. These are good options for people who want to purchase a second home but do not plan on keeping it for a long time. These options offer lower interest rates as well making your monthly payments lower.

Be Knowledgeable When Buying a New Second Home

Many second home mortgages get the same rate as a first home purchase. Some circumstances in a buyer's financial portfolio can affect the mortgage rate. In most cases, the additional rate is only one-eighth of a percent. Rarely will the increase exceed one-fourth of a percent.

A second home is a great investment because all of the interest is tax deductible, just like your primary home's mortgage interest. As long as there is space in your budget for a vacation home, you will be making a great financial choice and have a great new property to enjoy!

Are you looking for a Southern California beach home for your second home? Have a look at our Del Mar real estate or West Carlsbad real estate in San Diego, CA.

(565)

Article Source:


 
Rate this Article: 
 
Buying Patio Furniture Covers - 3 Factors To Consider
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Few Factors to Think About in Buying a Home in Sarasota Real Estate

by: Eliza Maledevic (February 19, 2008) 
(Real Estate/Buying)

Factors to Pay Attention to When Buying a New Used Car

by: Brandon W Thomas (October 21, 2008) 
(Automotive)

5 Key Factors to Buying Jewelry

by: Karen Howard (July 16, 2007) 
(Shopping and Product Reviews/Jewelry Diamonds)

Embroidered clothes factors you should always consider before buying them

by: Mark Richard Taylor (October 10, 2013) 
(Shopping and Product Reviews/Fashion Style)

Factors to be Considered While Buying Ties in UK

by: Shanon Foster (April 29, 2010) 
(Shopping and Product Reviews/Fashion Style)

Top 3 factors to consider when buying a sports watch

by: Rahul Kumar (January 20, 2011) 
(Computers and Technology)

Factors on Buying Your Own Modern Sofa

by: Jron C. Magcale (July 14, 2008) 
(Home Improvement/Furniture)

Factors to Keep in Check when Buying a new Water Purifier

by: Aliza Elly (October 28, 2016) 
(Home Improvement/Appliances)

Factors Consumers Should Consider When Buying Estate Jewelry

by: James Greene (May 19, 2007) 
(Shopping and Product Reviews)

Buying Patio Furniture Covers - 3 Factors To Consider

by: Albert Lee (July 25, 2007) 
(Home Improvement/Patio Deck)