With mortgage rates at historically low levels in the US, some folks who have the cash set aside and who still have paying jobs may have the idea that buying a second home is a good idea.
Quite frankly, it probably is a good idea if you can afford it. However, if you are looking at the possibility of buying a second home and you’ve never owned a second home before there are some items that you should think about as you set aside a budget for your new place.
Oh, and incidently, a good rule of thumb for setting aside money for these items is around 2% of the home’s value.
Of course you will have the mortgage payment that includes the principal, interest, taxes and insurance – otherwise known as the PITI. This is the case unless you pay cash for your second home.
Extra Expenses For A Second Home
Home Repairs
Moving and Travelling Costs
Advertising for Renters if you decide to rent your property out in your absense
Furniture and home fixtures
Lawn and Landscaping Expenses
Extra Supplemental Insurance (flood, earthquake, tornado and hurricane)
Maintenance
Lighting Fixtures
Flooring including: rugs, tile, carpets, laminate
Appliances – refridgerator, stove, dishwasher
Property Manager
Homeowners Association Dues
Home improvements and upgrades
Window treatments and Awnings
Chimney and Furnace Cleaning & Maintenance
This brief list of expenses you will want to consider and take into account in setting aside your annual budget. You will want to save this money in addition to what you take in with the rent you charge.
Owning a second home is a great way to lock in a guaranteed vacation place, build some wealth for your family, and perhaps have some extra tax and income incentives. Just be careful to include the extra expense that we’ve included as well as any others you may know of or come across.
If you want help determining whether you qualify for a second home mortgage please complete the form below.
