What to Consider when Buying a Home

Buying a second home is an upgrade to the first experience. You are purchasing the second home because your first one was a good choice, and so you will soon become the owner of two properties. The second home can be both an investment and vacation home since you can rent it out when you’re not living there. However, note that you will probably need a second mortgage to fund the second home. A cash-out refinance may help get the initial funds necessary to purchase that second home. And before you buy it, there are some factors you need to consider. Factors to Consider When Buying a Second Home 1. Can you Afford the Second Home? Before you decide to go for the second home, you need first to determine if you can afford it. For starters, you should have paid the first mortgage consistently and timely or completed it. You should also note that second mortgages tend to have higher interest rates, and you need to prove to the bank that you can handle both mortgages timely. 2. Location Location is an important factor, and if you don’t decide well, you won’t have the option to shift places. If you want to make the property a vacation spot, you should enjoy it for many years and not just once or twice. 3. The Mortgage Assuming you don’t have enough money, then you should apply for a mortgage. To know whether you qualify, check your debt-to-income ratio as most lenders don’t prefer buyers who have loans going over 36% of their income. You also need a good credit score of over 750 to get a loan. 4. Other Hidden Costs Though you may be thinking of relaxing on the beach after a busy day in your second home, you should consider the hidden costs like insurance, furnishings, maintenance, utilities and taxes. Bottom-line The second home can be your ultimate getaway for a dream destination and can also rake in some extra income when you’re not living in it. It’s a wise financial move, provided you know where to get a mortgage and how to utilize the home to the maximum.