Tuesday, September 19, 2017

Thinking about buying a second home? Here’s what you should consider.

buying a second home in Mesa, Queen Creek, Gilbert
You’ve worked hard and are close to retiring. You and your spouse would love nothing more than to have a home in the sunny part of the country at least part of the year. Chandler, Gilbert, and Mesa are perfect places to consider when buying a second home but don’t rush the decision. Take time to hire the right real estate agent, review your financial situation, and learn about the market before signing on the line.

Financial Plan
Before you look at housing inventory and mortgage rates, consider your financial plan, including short and long term goals. It might seem like a great idea to have a retirement home in Chandler but can you afford it? It’s worth a conversation with your financial advisor and tax professional. Things to consider include:
  • When do you plan to retire?
  • How much have you saved toward retirement?
  • Do you have a mortgage on your first home?
  • If yes, when will it be paid off?
  • What is your debt payoff plan for consumer and student loan debt?
The answers to these (and other questions) will guide your decision to buy a second home. Once you’re comfortable and ready, you can begin the process to hire a real estate agent in the market where you want to live, get pre-qualified for a mortgage, and start looking at available homes.

Market and Mortgage Rates

Mortgage rates have been low for a long time but they’re not going to stay low forever.

Rates for a second mortgage may be slightly higher so if you’re planning to carry a loan on two properties, consider the cost. You may choose to wait until the first home is paid or it may not make a big enough difference to matter.

Also consider why you’re buying a second home. If you want the option to rent it out, the added income can impact your taxes in the form of rental income, insurance rates, interest rates, and homeowners’ association fees so understand what you’re getting into before you buy.

HOA Rules

Before selecting the perfect condo or patio home to use as a part-time residence, understand your rights and responsibilities especially if the property is part of an HOA. There are HOAs that have strict policies about using properties as rentals or having long-term visitors so if you’re planning on renting or would like the option, make sure it’s approved by the HOA.

It’s also good to understand what the fee covers. Some cover front yard maintenance while others leave it to the owners to maintain. If you have to hire someone for lawn and/or pool maintenance, figure that into the cost of upkeep for the home.

In general, it’s a good idea to keep about 10% of the cost of the home in reserve for repairs and wear and tear on items like heating and air conditioning, plumbing, roof, and pool and landscape maintenance.

If you’re ready to get started with your purchase of a second home, call Beery Realty at 480-570-1912!