Purchasing a second home
WE HAVE A MORTGAGE SOLUTION FOR YOUR UNIQUE SITUATION
More and more people are realizing the benefits of Purchasing a Second Home. Imagine the convenience of having a place to go where you can relax and not have to pay for expensive hotel fees as well as going through the hassle of making and booking arrangements. In addition, a second home allows you to be on vacation while still enjoying the comforts of being in your own house.
YOU’VE BEEN WAITING. YOU’VE BEEN SAVING.
RENTAL vs. VACATION HOME
A second home can be a rental or vacation home. However, if you wish to rent out your home to pay for the costs of maintenance and other expenses, different rules apply. Please refer to purchasing an investment property to know the benefits and drawbacks of getting an investment property.
A vacation home will only be considered a second home if:
- It is suitable for use year-round.
- It is a one-unit home, instead of a multi-unit complex.
- The house is not under a timeshare arrangement, and is not rented full-time.
- The buyer has sole ownership of the house.
- The home is not managed by a firm or entity that controls the occupancy.
- It is occupied by the owner for a portion of the year.
- It must be located a good distance away from the buyer’s primary residence.
Before you start contacting realtors, make sure the following are in order:
As with the purchase of your primary home, you need to make sure your credit standing qualifies you for the purchase of a second home. Take note, however, that credit score requirements for second homes are higher than for primary homes.
Your mortgage payments won’t go away simply because you lost your job or because there was a problem with your income. Therefore, you will need reserve funds equivalent to two to six months’ worth of your mortgage loan payments.
ADDITIONAL INCOME SOURCES
Purchasing a second home as an investment property gives you a source of funds to offset the costs of having an additional home. This is not the case with vacation homes so you need to ensure you have sufficient income to cover the added expenses.