If you are considering buying a second home, this is an exciting time for you. Whether you’re looking for a vacation hideaway, rental property or fixer-upper to flip, here are some things to consider as you start evaluating and researching your options:
If it’s possible, pay for your second home with cash and know how much you want to spend up front. Figure out solid estimates for the property itself, closing costs, furniture and appliances, as well as an emergency fund to cover three to six months of insurance, utilities, taxes and HOA fees, if applicable. If you are unable to pay with cash, be sure to shop around for the most competitive interest rate and terms you can find.
If possible, drive or walk the neighborhoods that you are considering, to get a real sense of what they’re like. Talk to a tax or real estate professional to see what the property tax rates are like and if they’re expected to increase. If it’s a growing neighborhood, you may be asked to pay additional taxes in the future to finance schools and other services.
To help ensure that you’ll be able to grow the equity in your property, consider passing up the nicest property in the lower end neighborhood and opt instead for a less attractive property in a nicer neighborhood.
Working with a local real estate agent who has a solid reputation can make your life so much easier as you consider homes to buy. Connect with someone you trust and lean on them to provide information, insights and help you bargain for the best deal.
In a frenzied seller’s market, you may think that skipping the inspection and appraisal will help you win the property. But without an inspection, you risk spending hundreds of thousands of dollars on a home that could have major defects that aren’t obvious to the average person or to the naked eye. If possible, spend the time and money to get a thorough inspection and appraisal before signing papers. If you can’t take the time, look to your realtor to provide information about the home and help you make an educated decision about the risks.
If you’re one of the lucky ones to be able to purchase a second home, taking the time to do your research beforehand can make a big difference in your outcome.
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