If you've been thinking about buying a second home, now's the time to jump into the housing market. Interest rates are about to go up, which means housing prices will start going up too. If you wait too long, you may find yourself priced right out of the market. If you've never tried to purchase a second home, the process can be a bit frightening and confusing. Don't let that stop you from realizing your dream of owning a second home. Just follow the steps provided here to help you avoid some pitfalls along the way.
Think About the Additional Costs
Now that you're going to be purchasing a second home, you'll need to think about the additional costs. Even if your first home is paid off, you'll still have additional costs that you might not have anticipated. For instance, you'll now be paying to insure two homes instead of one. The insurance rates may be slightly higher on your second home since you won't be living in it full-time. Not only that, but you'll also have property taxes to deal with. Not to mention the extra federal taxes you'll be paying each year once the IRS realizes that you own two homes. Before you purchase the second home, make sure that you're in a place to comfortably afford the additional costs.
Identify the Use for Your Second Home
When it comes to purchasing your second home, you'll want to identify the way you'll be using it. For instance, will you be using it as an investment property? Or, will you be using it as a weekend getaway for the family? Knowing how you plan on using your second home will help you narrow down the search once you start working with a real estate agent.
Choose Someplace You'd Like to Retire
If you're going to be retiring in a few years, you may want to relocate to your new home once you've officially retired. If that's the case, you should choose a location that you'd like to retire to. Purchasing your future retirement home before you're actually ready to retire will give you enough time to build up some equity. It will also ensure that you get the best rates for your mortgage. Lenders often provide better interest rates if you purchase your second home before you actually retire.
If you're finally ready to purchase a second home, use the tips described above to help you avoid potential pitfalls.