Is Buying a Second Home Right for You?

You've successfully owned a house for a number of years now, made your mortgage payments on time and experienced a gradual rise in income. It's possible you've come to a point in your life where you might be toying with the idea of owning a second home. There are many reasons people decide to buy a second home, but the most common are:

• A rental property to help boost finances and boost cash flow each month.
• A vacation home for a fun getaway.
• A home for your retirement years. You can lock your future retirement home payments into today's prices.
• A home for a family member which poses as an investment building to rent out till your heir comes of age.

Is buying a second home a good investment? The answer depends most critically on your current and future income levels. The biggest advantage right now is the soft real estate market nationwide. You can get great bargains all across the board. Many homes which were out of your reach a few years ago are now very affordable. However owning a second home is still a huge financial commitment. It would be foolish if you did not consider the risks alongside the advantages.

Location

Location is very important when considering a second home purchase. In real estate location is everything. You aren't going to buy property knowing that its value will decline over time. If you are not selective and thorough in your choice, than this can certainly happen. To increase the likelihood of a higher resale value look for property in popular areas near beaches, waterfronts and mountains.

Mortgages

Cost is also going to be a major consideration. Mortgage interest rates for a second home purchase will be at least a half to a whole percent higher than the rates for your primary residence. Home owner's insurance can be a lot higher as well, especially if you purchase land in an area with frequent severe weather like hurricanes, flooding, or forest fires. Many other financial decisions need to be thoughtfully discussed before making a purchase. These will mainly revolve around the overall principal and mortgage interest rates, but also the potential taxes and insurance costs associated with your location.

Taxes

Tax laws concerning second homes can be very complicated. You should seek professional advice concerning potential taxes because you will want to look for a property that reaps the biggest possibly tax benefits from your investment. The basics include the capital gains exemption. You are allowed a substantial amount in capital gains when you sell a primary residence, however, that does not apply to a vacation home. In order to get a tax break that second home would have to be a primary residence for at least two years. If you rent your second home more than two weeks out of the year you have to pay taxes on that income as well. So if you rent your property out you can't write it off in your taxes.

Learn the best methods for locating and buying a second home mortgage at www.real-estate-yogi.com. They have agents available around the clock, seven days a week ready to help you in your area of the country. Call them for a free consultation at 1-866-987-1397.