Second Home Purchase
April 3, 2008 – 5:24 pmThere are many reasons to buy a second home. Retirement, Investment or just vacationing. No matter what the reason, caution and diligence should help guide to the right property for you. The means of financing and taxation are different from your primary home, but well worth the benefit when executed properly.
An excerpt from The New York Times:
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KNOW WHY YOU’RE BUYING
“People don’t take a step back and think about why they really want to buy this home,” Mr. Venezia said. “There are all kinds of factors: as an investment property, a personal getaway or as a place you’ll ultimately retire to. Those factors cross one another, but if you know the single reason, then that’s going to drive where you buy, the type of house you buy, and whether you’ll rent it out.”
For example, if you determine that your getaway is going to be your eventual retirement home, you’ll want to think about accessibility and the proximity of health care facilities.
SECOND-HOME FINANCING IS DIFFERENT
“Getting a loan on a second home has always been more difficult,” Mr. Venezia said, adding that such loans can carry a higher interest rate than one for a primary residence.
“Don’t assume your current lender is your best bet for financing,” Mr. Haden said. “Different lenders have different standards for mortgages on second homes.
“Plus, whether you’ll rent the property some of the time is a factor as well; standards for what qualifies as an investment property vary greatly between lenders.”
The bottom line is that you should do your financial research, get help with your potential tax benefits (which can get complicated), and don’t stretch yourself too thin - or you will pay for it.
“Think about all your other expenses,” Mr. Venezia said, “not just on the primary home and daily expenses, but savings for retirement and your kids’ education. Are you going to be able to do that and have a second home, or are you going to be tapping into those things?”
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