Can you Afford to Buy a Second Home?

Buyer

If the thought of purchasing a second home sounds tempting, indeed it is! Owning a second home in a favorite vacation spot such as St. Augustine may not only serve as a great getaway, but also as a solid investment.

You’ll need to do your homework, and crunch the numbers, before making the jump into a second home.

Some things to consider when purchasing a vacation home (aside from the price) are:

Down payments and interest rates. Even though interest rates are rock bottom as of late, it is important to realize that most mortgage companies will charge you a higher interest rate for a second home. In addition, you may need to fork out a higher down payment on a second home, as well.

The bottom line: find a good mortgage broker who can explain all of the financing and down payment options available for your second home purchase.

Homeowners Insurance. Many vacation homes are located in places where natural disasters, such as floods and hurricanes, are more common than other areas of the country. If this applies to your second home, then be aware that your homeowner’s insurance premiums could seriously cut into your overall budget.

The bottom line: shop around and find the best quotes before making an offer.

Keeping it up. Many times, in the quest for a vacation home, many of us forget that the home will require upkeep and maintenance, and that these costs could put a large dent into our overall budget.

In addition, if you plan on hiring a company to manage your property, you’ll likely pay out up to 50 percent of the income you receive from rentals.

The bottom line: be sure to make maintenance and upkeep an integral part of your budget, and keep it in mind when deciding on how much home you can afford.

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