Have you been thinking about buying a second home? Here’s some food for thought. Real estate is always a good investment. Whether you want to generate additional income by renting out the property or use it as your escape from the chaos of everyday life, there are several factors to consider before purchasing that property:
4 Factors To Consider When Buying A Second Home
- First and foremost, determine the reason for purchasing a second home – are you planning on using the home as a rental property or as a vacation home? Or do you want to set it up as a primary residence for your oldest adult child? This will help you decide on the type of mortgage to apply for.
- Find a location – once you determine the purpose of that second home, narrow down your search for a location based on the purpose of the home and the amenities that you or other individuals might enjoy. You can search online or visit open houses to see in real time that property that you maybe interested in.
- Make sure you can afford a second home – before you start the loan application process, make sure that you can afford a second home. Keep in mind:
- Your DTI or Debt-to-Income ratio must be low enough so you can comfortably afford another home mortgage. In most cases, lenders will only approve you if your DTI is below 45%.
- As with your first home, you’ll need to make a down payment on the second home. The amount will usually depend on the type of mortgage you apply for, but in most cases, you’ll be looking at 10% to 20% down.
- Compare interest rates with several lenders. Interest rates on a second mortgage are typically higher than those on a primary residence because you’ll be considered a higher risk.
- Monthly maintenance and upkeep costs are another factor to consider when buying a second home. These costs often include HOA fees, insurance, property taxes, and utility bills as well as renovations and repairs.
- Find the right lender – once you’ve determined that the time is right to buy a second home, it’s time to start shopping for the right lender and loan. The right lender will help you compare loans and interest rates in order to find what best fits your individual financial needs. Furthermore, they’ll be with you every step of the way throughout the loan process, from filling out the application until your real estate agent or broker hands you the keys to your second home.
Get In Touch With Your Florida Mortgage Specialist Now!
We know that finding the right investment property takes a lot of effort and more than that is to find a good lender and mortgage rates. That is where we step in. To learn more, call Florida State Mortgage Group, Inc. today at (954) 359-3000.