What Is a Second Home?
As the weather begins to turn warmer, many people are beginning to think about their summer plans. Some will fly away to their favorite vacation spot, but taking a vacation to a place you have to fly to can get expensive and can limit where you go and what you can do.
A good alternative can be to have a vacation home that's there for you whenever you want to go.
What Is a Second Home?
A second home is defined as a one-unit property that's located within a reasonable distance from your primary residence. It can be a home that you occupy for some portion of the year or by someone you allow to occupy it. However, to be a second home, it must not be rented or be part of a timeshare arrangement.
So, it might be the cottage you own on the lake a few hours away; it could be a home you let your son live in while he goes to college; or it could be a house you own that your friend and her children moved into because she lost her job. Those are just a few examples.
A growing number of families are buying vacation homes and it's a trend that's likely to continue. If your new vacation home is close enough to your permanent residence, every weekend could be an opportunity to go fishing on the river or skiing down the slopes of your favorite mountain.
Finding a Second Home
Finding a second home doesn't have to be hard. You just need to work with a reputable realtor-one that you can trust and who may come at the recommendation of your friends or family members. Since the Internet is becoming a highly valuable tool, you can also go online to search for a good realtor.
Financing a Second Home
The decision to buy a second home does depend on things like: how affordable the home is, the time it takes to travel to get there, and how likely it is to appreciate. But affordability doesn't have to be the most difficult factor. Lenders these days are offering several types of mortgages that make buying a second home very affordable. You could go with an interest-only mortgage where for a certain amount of time during the loan, you are only required to pay the interest; though, you could add as much principal to your payment as you wanted.
You could also go with a home equity loan. There are some lenders who offer home equity loans for up to $500,000. Or you could go with a jumbo loan if the purchase price of the home is more than $417,000. To get an idea of how much you can afford, try using a home affordability calculator. Then, check with your home loan expert about which financing option is right for you.
So if you have plans to buy a second home, it doesn't have to be difficult at all. Once you find a realtor that you can work with, you have several options to finance it. All it takes is some good research to find out which works best for you.
By Diane Tuman
- Last edited October 12 2012
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