I've been through the battle before. It wasn't really a battle, more of a struggle. However, I learned a lot when I first learned how to buy a home. I've heard the process is supposed to get easier now that I've done it before. So far I've found that to be true, however my real estate adviser has told me time and time again that it still requires special attention.
Because I've owned a home already, I've built up some equity, as well as my credit score. Buying A Second Home should be a piece of cake... right? When I first went to my accountant with this idea he had some reasonable questions.
- Do I plan on selling my current residence? If I plan on keeping both homes will I be able to afford the expenses associated?
- Is it possible to transfer an existing mortgage onto another home. What are the brokerage fees if you cancel your existing mortgage. What are the options for mortgages when buying a second home?
- When purchasing a second home what are the chances of approval? How will my credit score or other financial issues affect a new purchase?
- How will equity be associated towards buying a new home?
I obviously had to spend some time thinking about this. A second home is quite the investment, and would it just turn out to be a money drain? Maybe I should consider Buying A Second Home For Investment? My accountant also stated that getting a loan to buy a second home has much stricter guidelines as the risk to the lender is viewed as more threatening. Sometimes however lending companies look more favorably if this second home is intended as a vacation home rather than an investment property. It is easier to qualify for a vacation home than it is for an investment, the policies on down payments are more relaxed, and the interest rates are usually more competitive.
When I started to shop around I realized that the down payment required on a second home was going to be higher than the one I would use on a primary residence. The bank often asked for anywhere between 20-35% of the total purchase price. That's a lot of money up front. Most lenders also required a great credit score.
My account found a website called www.real-estate-yogi.com and told me I should ask for their opinions. I called their toll free number 1-800-987-1397 and spoke with an agent directly for quite some time. We worked out what it would probably cost me financially. We discussed where the best place to buy a home would be, and this included states with lower land taxes. Lastly we discussed the long term financial implications and how it will turn out as an investment.
There are some similarities here that applied to the steps to buying a first home, but in some ways it felt like there was even more risk involved. When I found help with buying my first home all I had to worry about was how I'd come up with the money upfront, and how I'd be able to pay the mortgage month to month. This is clearly something I'll need to think about, but I couldn't have started the process without real-estate-yogi.com.
