With the real estate market bouncing back after a long depression, more and more people are finding themselves in the market to buy second homes. And, it’s no wonder – now is the perfect time to do it because interest rates are still historically low and lenders are finally starting to loosen the purse strings and lighten up on qualification requirements. If you want to buy a second home for retirement or investment purposes, then knowing how to go about it will help you avoid common pitfalls and problems. Here are some helpful tips on managing the process from our Wilmington NC builders.
Get to Know Your Desired Location
If you have a location for your second home in mind, you should get to know as much about it as possible. A local real estate agent will be able to help you learn more about the area. They’ll be able to tell you about the local school system, the local traffic, the climate, popular amenities and attractions, ease of access, and more. You should also ask for historical prices and recent comparative sales in the area so you can improve the odds of you getting a good deal on your second home.
Consider the Return on Your Investment
Even if you’re not looking to flip a property, you should still consider the investment potential for your second home. Do the homes in your desired location fare well on the resale side? Just because you’re not planning on selling the home in the near future doesn’t mean that you might not decide to sell it at some point, so you will want to ensure that you’re investing in a property that will give you a decent return should that time ever come.
Many buyers of second homes want their homes to be located in scenic areas, such as on or near the beach. If you’re looking for a new home in a coastal community, then you need to be aware of the need for flood insurance. It can be challenging and costly to obtain flood insurance, but it can be even harder for a second home because it will most likely not be lived in year round.
Getting a Mortgage
Getting approved for a second mortgage isn’t impossible, but qualifying for one can be made more difficult if you have debt on an existing mortgage. But otherwise the process remains the same. You will need to meet the lender’s credit rating and debt-to-credit requirements and have between 10% and 20% of the home’s price to put down. Depending on the lender, you may be able to use the equity from your current home to help you buy your second home. Just be aware that should you need the equity in the case of an emergency down the line, it will be used up.
Second Homes and Taxes
If you are planning on using your second home as a genuine second home, then you may qualify for a tax deduction on your interest payments. Or, if you are planning on renting the property out, then you should learn more about the state and federal tax ramifications, especially if you’re planning on renting the home out for more than 14 days a year.
Let Trusst’s Wilmington NC Builders Help You Get the Second Home of Your Dreams
There’s a reason why so many retirees and property investors turn to Trusst Builder Group for their second homes. We are one of the most trusted luxury home builders in the Wilmington area and we can help you find the perfect second home for you and your family. Visit our Wilmington NC builders today or call us at 910-371-0304 to schedule a consultation with one of our custom home designers.