You are viewing the printer-friendly version of Finding the Perfect Second HomeFinding the Perfect Second HomeThinking of purchasing a second home? Here are some tips to help you with the practical aspects.Check out the neighborhood. Take this into consideration just the same as you would when buying a primary residence. Does it meet your list of needs and wants? You should also consider how long you plan to keep this property and if it suit your needs as they change with time. A remote lakeside cabin would be nice for a young family but how will it do for retirement? Financing for a second home might be tougher. Usually lenders may ask for a larger down payment and charge as much as a half point more in interest because they think you are more likely to default on the second home if times get hard. You could take out a home equity loan on your primary home to help finance your second home. Home equity loans usually carry a lower rate of interest than a conventional mortgage. Never purchase the home without a qualified inspector to check it over. Some vacation areas have termites, ants, rodents, mildew, leaky roofs, and inadequate septic systems. Since you will be away from this home for long periods of time you should take extra care for security issues. Get someone to collect your mail and keep an eye on your place in your absence. Ask a neighbor to park their car at your house or use light timers to create an illusion that someone is home. Install an alarm system. Insurance premiums for second homes are usually higher do to the increased chance of break-ins. Taxes for vacation properties can be more complicated than for a primary residence, particularly if you rent the property out for more than 2 weeks a year. If you do, you are likely to lose any mortgage interest deduction and you will pay tax on the rental income. You can claim some of your repairs and maintenance costs as a business expense. Consult a tax advisor to find out how tax rules apply to your situation. aa |