Considerations for Buying a Second Home

If you’re thinking of buying a second home, here’s what you should know:

1. Prepare to Pay More

Financing a buyer’s second property is risky for lenders, so you’ll be scrutinized even more thoroughly than in your first home buying process to make sure you can afford two mortgages. Even if your assets paint a good picture, you’ll likely have to pay higher interest and a larger down payment to make the lender feel more secure.

2. Choose Locations Carefully

Even though a change of scenery is one of the benefits of owning a second home, you should choose a location close enough to your primary residence that you’ll actually visit often—there’s no sense in paying for a house you’ll only travel to every few years. If you’re buying this property to use as a vacation home, try not to go too remote. Consider accessibility and convenient access to grocery stores, medical care, etc.

3. Think About Taxes

Owning two homes means paying more property taxes, of course, but it may also come with other complications that increase your tax burden. For example, will your second home be in another state? You’ll have to look into regulations in each one. Do you plan on renting your home for parts of the year? If you have tenants long enough for it to be considered a rental property, the tax rules could be different. We recommend consulting a property tax professional to go over this with you.

4. Decide What You Want

Once you’re absolutely sure you can afford a second property and all of the ongoing expenses that entails, you should still think very carefully about what you want from a second home before you pull the trigger. Do you really love the area enough to live there for part of the year? Will your family make good memories there for years, or will visits drop off as the kids get older? Set firm goals for your second home, and remember, just because you can do something doesn’t always mean it’s a good decision.

When you’ve weighed the pros and cons and feel confident about buying a second home, get in touch with your Loan Officer. Envoy will make sure your second mortgage process goes smoothly.