How To Buy a Second Home

The first thing you must do when looking to buy is to decide on where you want to have a second home. Quite often second homes are in vacation areas and travel is involved to get there. You will want to make a home buying excursion to the area you have decided upon. To make the most of your time, it is very important to have contacted a real estate agent in the area you are planning to buy in, so she can line up houses that fit your criteria for you to visit.

Spend at least a week or two in the area visiting homes that are for sale. Talk to the locals, not just those who vacation there like you. Learn as much as you can about the area. Read local newspapers, check out the activities there and the social life. Since a second home is a place that you will be spending time in and not an investment property, it is important to feel comfortable in the neighborhood and truly feel at home in the home you choose. 

As much as this is a great time to buy real estate, you don’t want to rush into anything. Take some time to contemplate the decision, especially if you have only recently begun to consider the idea. If you have always planned to have a second home in the area you are now looking at, you may not need to deliberate as much.

Make sure you are financially ready for the second home. It is important to have very little debt, substantial equity in your primary residence, healthy savings and good credit if you plan to invest in a second home. You should also be sure to take all costs concerning the new home into consideration. Factor in the cost of insurance, taxes, utilities, any necessary renovations, yard work, snow clearing and other household expenses. Taking on excessive expenses during a recession is only a wise move if you are financially stable enough for it to not impact other areas of your life.

Look into the tax ramifications. Many of the things that are tax deductions on the primary residence are not with the second home. Talk to an accountant about such details. You may also want to look into the tax advantages and disadvantages of renting out the second home at least for a portion of the year to help finance it.